Fed said the rate will stay low!!

Today the Fed Policy Statement said rates will stay low "for an extended period" and the Feds MBS purchase program will end on March 31st. Bad news for MBS because this gives the green light to stock traders, thus there will be money leaving the bonds moving into stocks. This will help the Carry Trade for a while. MBS are currently trading down over 12 bps. across the board.

The end of the Fed's MBS programs means there in no more government influence in the pricing of mortgage loans. Before the Fed decided the purchase MBS rates were in the low to mid 6's. Expect them to be there shortly. Could be the end of a great ride for super low rates. Lock in your rate as soon as you can. Rate are going up.

No more 90 Day seasoning rule for FHA loans

On January 15th 2010, the Federal Housing Administration (FHA) temporally waived their rule of a 90 day seasoning rule for sellers. Starting February 1st 2010, FHA will allow sellers who have owned properties for less than 90 days to sell these properties to buyers who are using FHA for their financing. Prior to this waiver, FHA required the sellers to own the property 90 days before a buyer could enter into a contract to purchase using FHA financing. In 2009, FHA changed the 90 day policy to allow banked-owned properties to be exempt from the 90 day rule. FHA now feels they can help the future housing market by allowing investors to sell properties before they have owned them 90 days, thus speeding up the time properties are on the market. Here are some of the FHA requirements that we know about currently:



· This waiver is available for one year, from February 1st, 2010, unless extended.

· All transactions must be at arm-length - meaning no identity of interest can exist between buyer and sellers.

· If sales price is 20% or more of the seller's acquisition cost, the lender must provide supporting documentation and/or a 2nd appraisal and order a inspection of the property and provide it to the buyer.

· Waiver is only for forward mortgages, not reverse mortgages.



Stay tuned for actual investors guidelines for this. As with any change to FHA guidelines, individual investors will have their own over lays (rules).

Changes comming for FHA

FHA has always had some of the lowest credit score requirements for mortgage loans. FHA was designed to promote homeownership for Americans who might not have been able to obtain traditional bank financing. Lately, FHA lenders have been increasing the minimum credit scores from no score to 620 for most lenders. There is talk now that FHA is going to start requiring higher credit scores maybe up to 640. FHA will do this because there are higher losses for credit score under 640 and they are being adversely selected for loans with lower credit score. Fannie Mae and Freddie Mac had loans similar to FHA but required higher scores. Over the last few years, Fannie and Freddie have stopped doing similer loans to FHA and have completely stopped doing any cash out loan above 80% loan to value. Until last year, FHA still allowed 95% cash out loans. Now FHA will limit borrowers from taking more than 85% of their property value out as a cash out mortgage. Since FHA was the only source for these types of loans, they were given all these loans and all the losses that came with them. Now FHA is getting in line with Freddie and Fannie and will be requiring higher scores and lower loan to value requirements for cash out loans.

Is this good? I think it is. What this will do is force borrowers to have better credit to have a home loan and also not tap into all of their home equity. Here at NOVA Home Loans we have a staff of credit analysts that will work with our applicants to educated them on how to increase their credit scores so they can be approved for home loans and to understand how to keep good credit scores. This is a free service that NOVA Home Loans provides. Contact me or your NOVA Loan Officer for more information.

Most lenders make their lending decisions on how well the loan will perform in the 1st 12-24 months. If a home loan performs well for the first 24 months, then the likelihood of the loan going bad is very little. Lenders know the biggest reason for home loans not performing is due to loss of employment. NOVA recognizes this and is the only lender that offers the SafeHouse Mortgage Protection Plan to our homeowners. SafeHouse is a program that assists homeowners in making their mortgage payments if they lose their employment. The program will also provide monetary assistance to members who experience a negative event that impacts their ability to pay their mortgage. Please contact me for more details.

These changes will not prevent people from being approved for a home loan. It will force buyers and homeowners to ensure that they are in a stable financial situation before they are provided mortgage financing.

Mortgage rates have come down a little today!

Mortgage rates have come down slightly today from their levels last week. The MBS are trading better today which in return have given us better rates today. Check back tomorrow to see what MBS are duing.

4.55% Pima County Bond Mortgage is Here!!

We are now offering a 4.55% 30 year fixed mortgage for First Time Home Buyers to purchase homes in Pima County. There are no zip code restrictions on where these homes can be purchased. These rates are for FHA and VA loans only. This is a great opportunity for first time home buyers to take advantage of these great low 4.55% fixed rates.

We also offer Down Payment Assistance programs to assist qualified home buyers in taking advantage of up to 4.5% of the Sales Price. The Sales Price Limits for existing homes are $276,334 for a 1 unit homes and $353,752 for a 2 unit homes. For new homes $337,741 for 1 units and $432,363 for 2 units. There are income limits to qualify for these loans. For non-targeted areas in Pima County for a family of 1-2 adults, the income liimits are $69,000 and for 3+ the income limit is $79,675. Targeted areas are parts of Pima County that HUD is trying to increase home ownership in. These income limits are higher to promote home ownership and these income limits are $72,480 and $79,675 for 3+ members.

These loans are underwritten to normal FHA and VA guidelines and the current allotment for these loans is currently $25,000,000 for Pima County. These loans will go fast!!! Contact me or your Loan Officer for more details for this loan program today.

The New Good Faith Estimate is here.

Starting January 1st 2010, lenders will start using a new Good Faith Estimate(GFE). The 2010 GFE is HUD's attempt to make it easier for borrowers to understand the fees and terms of their home loan. There is only one thing it has really done, made it more confusing for borrowers.

First, the old GFE was one page, 2010 GFE is now 3 pages long.
Second, the old GFE gave the borrower all the information needed to see how much the closing costs are, the rate, the amount needed for closing and the total of payments on the new loan. 2010 GFE requires additional disclosures to tell the borrower how much the down payments are, how much the total payments are, a signature disclosure for the borrower to accept the terms of the 2010 GFE, but (if you can believe it) the 2010 GFE does not have a signature line.

There are some good changes that the 2010 GFE offers.
First, the fees cannot change more than 10% (zero change on some fees) from the first time the 2010 GFE is given to the borrower. The GFE will only be issued once a property address is established. For purchases NOVA Home Loans will issue a disclosure that is very similar to the old GFE so borrowers have all the details of the transactions. Once a property is established, the 2010 GFE will be issued within 3 days. For refinances the new GFE will be issued within 3 days of the application date.

Second, any changes to the loan must be requested by the borrower in writing. If the lender needs to change the loan terms, it must be because of a change in legitimate circumstance. Lenders and Loan Officer cannot just make changes in order to charge more fees closer to closing.

Third, the 2010 GFE has a section that allows the lender to show 3 different pricing options for the borrower to choose from. The first option will be a proposed loan, the second will be a option for lower settlement cost/a slightly higher rate and the third will be for a lower interest rate/slightly higher closing costs. These options will show the borrower the difference in the payments for paying a discount or premium for their loan. This will be very help full for the borrowers in choosing the right loan for them.