After months of criticism that it hasn’t done enough to prevent foreclosures, the Obama administration announced on Friday a plan to reduce the amount some troubled borrowers owe on their home loans.  This plan will not apply to the investors or the vacation homes properties.  To get the full story read Gov’t Unveils $14B Plan to Help Troubled Homeowners. 

If you have any questions regarding your mortgage or selling your home contact Team Decell.

 Here we go again with additional changes in the already trouble world of Mortgage.  It seems that the only thing that is certain is that the mortgage industry is going to continue to change.  If you are considering the sale and purchase of a home it is crucial to speak with a LOCAL Lender that can walk you thru this very complicated process. 

I say LOCAL because many consumers have used mortgage institutions over the internet only to find that the loan does not close or the fees have drastically changed.  Work with your Realtor because they will usually have a recomendation of someone that they already have a relationship with.

TEAM DECELL is your neighborhood experts.  We assist clients in buying or selling their home in Frisco, Plano, McKinney, Allen and the Surrounding Area. We also have relationships with Lenders that have a proven track record and can get the job done in a painless and timely manner.  Don’t let the inexperience of others spoil your Home Purchase.  We have a team of experts that will take care of your needs.  Below are the upcoming changes.

1. Mortgage insurance premium (MIP)  increased to build up capital reserves and bring back private lending.
   1. FHA will raise the up-front MIP to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
   2. If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
   3. This will allow for capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
   4. The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.

1. Update the combination of FICO scores and down payments for new borrowers.
   1. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
   2. This allows FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
   3. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

1. Reduce allowable seller concessions from 6% to 3%
   1. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
   2. This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

1. Increase enforcement on FHA lenders
   1. Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.
   2. Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
   3. Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
   4. HUD is pursuing legislative authority to increase enforcement on FHA lenders.

RESPA Reform-Major Changes

Congress enacted the Housing Recovery Act of 2008, which included amendments to TILA, known as the Mortgage Disclosure

Improvement Act (MDIA) of 2008. Effective January 1, 2010, highlights of the RESPA reform include:

·         Revised standardized Good Faith Estimate

·         Revised HUD-1 Settlement Statement

·         Implementation of Good Faith tolerance

·         Elimination of the 1% origination cap on FHA loans

Application means the submission of a borrower’s financial information include: Borrower’s name, borrower’s social security number, gross monthly income, property address, estimated value of property, and loan amount. Upon receipt of these items, it is a requirement to issue the GFE within 3 business days. It is assumed that a GFE cannot be issued without a property. Since a good faith is not to be issued until a property is found, the address should not show TBD.

If a mortgage broker submits a GFE to a lender and the lender accepts the GFE, the lender is tied to the GFE in its entirety, including fees and important dates. However, it is important to note that Premier Lending will be re-disclosing on all loans and will only reference our GFE as the accepted GFE. If the broker purports to have locked in the loan but does not lock the rate and the lender accepts the GFE, the lender is subject to the GFE presented. In other words, they have to honor the interest rate commitment and the settlement costs presented on the accepted GFE.

An accepted Good Faith Estimate can only be reissued under the following:

·         GFE expires after 10 days and the loan is not locked (a loan originator is bound within the tolerances provided to the settlement and terms listed in the GFE) – if the loan is locked, then the GFE cannot be reissued until after the date of the lock expiration.

·         Property use changes

·         Borrower’s credit score has changed negatively

·         Parties are added or removed from title or the property moved in or out of trust

·         The borrower does not proceed to closing in a timely manner after final approval or does not act diligently to provide lender information (in other words, give the borrower a “needs” list with expiration dates).

Changed circumstance exists (changed circumstances are defined as an act of God, war, disaster, or other emergency, or information that was relied upon about the borrower or that the transaction relied on found to be inaccurate after the GFE has been provided. Information may include credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information used to provide the GFE).

This is good news for the public who want to purchase a home.  Lenders can’t do the bait and switch on you at the last minute.  If you have questions regarding Homes for Sale in Frisco, McKinney, Allen, McKinney, Plano, Little Elm and Prosper contact TEAM DECELL.

Lenders Step Up Foreclosures As Moratoriums Expire 

Foreclosure floodgates may soon give way as the nation’s leading mortgage lenders lift their recent foreclosure suspensions and move those borrowers that are ineligible for federal programs on through the property repossession process.

According to a Wall Street Journal report, J.P. Morgan Chase, Wells Fargo, Fannie Mae, and Freddie Mac all say they have increased foreclosure activity over the past few weeks. The companies have recently rescinded temporary foreclosure moratoriums that were instituted at the urging of lawmakers and regulators to allow time for the Obama administration’s mortgage relief plan to be implemented.

West Frisco, Frisco and the surrounding area can expect some additional foreclosures as well, for more information on Frisco Foreclosures or any Foreclosure in the area contact TEAM DECELL your real estate specialist.

How Lenders Evaluate a Buyer’s Credit in Today’s Market

When a lender evaluates a home buyer’s creditworthiness, they consider several factors about the buyer’s past credit-usage behaviors. These behaviors have been systematized into what is called a “Tri-Merged Residential Credit Report” (T.M.R.C.R.) and is quantified with a scoring system called F.I.C.O. (Fair Issac Company). The score is essentially a merger of reports from three major credit repositories known as:

·        Experion/T.R.W.

·        Equifax

·        Transunion

While F.H.A. and V.A. are not officially F.I.C.O. driven in their credit-approval processing, many lenders are still giving heavy weighting to the scores on these loans. Conventional (F.N.M.A. & F.H.M.L.C.) lenders have been using this scoring system for years.

Listed below is how the F.I.C.O. scores are generally interpreted:

·        Scores range from 300 to 850.

·        Score under 600 - will most likely need to use loan programs that are not F.I.C.O. driven. Represents extreme concern for underwriting and may result in additional fees, higher rates and/or points, additional down payment required, or even non-approval.

·        Score 600 - 620: The underwriter will need to carefully review the application and may result in more fees, points and/or lower loan-to-value ratio.

·        Score 620 - 660: This is considered a cautious risk although the buyer does stand a good chance of getting the loan provided he/she can explain any derogatory notations (i.e. late payments) in a plausible manner.

·        Score 660 - 680: This is a standard automated approval score.

·        Score 680 - 699: This is considered a very good risk by the lender.

·        Score 700 - 719: This is considered an excellent risk by a lender and is pretty much a “slam dunk” for approval.

·        Score 720 & above: This is considered “Accept Plus” for automated underwriting.

To determine the borrower’s credit score, most lenders apportion weights as indicated to the following factors:

·        Timely payments - 35%

·        Total debt - 30%

·        Length of credit history - 15%

·        New credit inquiries - 10%

·        Amount/type of credit - 10%

A buyer/borrower can get a free copy of their credit report from each repository by mail or online at: www.myFICO.com. They are entitled to one free credit report from each agency once a year. Consumers should review their credit reports once a year, as they often have inaccuracies and old derogatory notations that should be removed from the report.

Methods that a borrower may use to improve their credit score:

·        Dispute incorrect information by directly contacting the credit reporting agency.

·        If the borrower/buyer has any past-due debt, they can contact the creditor directly and settle the debt. Creditors are often willing to settle past-due debt for less than what is owed and sometimes are even willing to remove the derogatory notation about the debt. If the debt has been sold to a collection agency, the borrower would have to contact the agency.

·        Pay down credit card balances, if possible, to less than 1/3 of the available limit.  At least a minimum of 50% of the limit.

·        Work to show that they have maintained 12 consecutive months of timely payments on ALL of their financial obligations. If they have gone into foreclosure and/or bankruptcy, this will take longer; perhaps three to four years.

Be sure to remember that most of you are NOT credit experts and should always condition any advice you give buyers/borrowers by suggesting that they seek the assistance of a qualified credit counselor or Mortgage Professional. Brian McCauley with Waterford Financial in West Frisco will be happy to assist you with all your needs call him at 214-975-3218.  However, these are the basic rules when a lending underwriter is deciding whether or not to approve a loan.

For assistance with all your home buying needs contact TEAM DECELL.