Mortgage Information

*Serious* Flood Insurance Changes!

By | October 30, 2013

If you’ve got a property in a flood zone – or you’re thinking about buying one – you need to know about BIG, BIG changes that are coming.  Barring the housing meltdown of 2006, this is perhaps the single most impactful change to our market I’ve seen since I started working in real estate.  And it’s not a good one.

The Biggert-Waters Flood Insurance Reform Act was signed into law on July 6, 2012 in response to recent major drains on the federally run National Flood Insurance Program (NFIP).  Virtually all flood insurance policies in the U.S. are underwritten through this program.  It’s been a major drain on the federal government and natural disasters like Hurricanes Sandy and Katrina have caused the program to run at massive deficits.  In response, the Biggert-Waters Act has aimed to fundamentally alter the way policies are charges to reflect the actual cost of insurance instead of a subsidized cost.

Who’s Affected

If you’re in flood zone ‘X’ or ‘X-500’, you don’t have much to worry about.  You’re probably not required to carry flood insurance for your mortgage and these changes won’t apply to you.  If, however, you’re in flood zones ‘A’,  ‘D’, or ‘V’ (or any variation thereof), these changes ARE going to affect you and are very likely to increase the amount you have to pay for flood insurance.

It’s important to know that these zones aren’t just along waterways and the coast.  In fact, most of the properties that will be affected AREN’T in these areas and the hardest hit won’t be the coastal properties.  The link below will take you to the FEMA website and will allow you to check the flood zone for your property:

https://msc.fema.gov/webapp/wcs/stores/servlet/FemaWelcomeView?storeId=10001&catalogId=10001&langId=-1

What That Means For You

Owners of non-primary residences in Special Flood Hazard Areas will see 25% increases annually until rates reflect the true risk (which can be massive).  Owners of primary residences in SFHAs will be able to keep their subsidized rates until they sell their property, allow their policy to lapse, suffer severe, repeated losses, or purchase a new policy.  Owners who buy into one of these areas will have to pay the full amount right away without the graduated increases.  Also, the law is retroactive to July 6, 2012, so if you’ve bought since then – whether or not it’s a primary residence – you’re affected.

We’re Also Getting New Flood Maps

The other leg of this law is that FEMA was ordered to redraw their existing flood maps using new tools that weren’t available when they initially mapped the nation.  Sarasota County’s map is scheduled to be presented in February of 2014 and is slated to go into effect sometime in 2015.  Properties with zoning changes will see premiums increase at a rate of 20% per year until they reach full-risk rates.

More Information

This is just a brief overview of the Biggert-Waters Act; there’s a ton more information available through FEMA.  I’m including a link to a FEMA-issued .PDF that further outlines the changes:

http://www.floods.org/ace-files/documentlibrary/2013_nfip_reform/FEMA_PPT_BW12_32613.pdf

… And Now The Reason You’re REALLY Reading!

One of my favorite artists of all time is Michael Jackson.  I was really bummed when he passed – but there may be hope: CNN filmed a segment at his Neverland home and you can clearly see something in the background as they film his suite.  Is it his ghost?  A trick of the tape?  Maybe we’ll never know, but it’s definitely worth checking out:

Interested In Buying or Selling?


When you hire Alex Krumm at Re/Max Alliance Group, you’ll get an award-winning expert agent ready to work for YOU!  I’m in the top 2% of active local agents for homes sold and I’m used to selling more homes for more money in less time.  Put the benefit of our area’s #1 brokerage to work and call today!

Alex Krumm, GRI, CDPE
Broker Associate, Re/Max Alliance Group
SAR Professional Development Committee
4-Year Winner, Five-Star Best In Customer Satisfaction – Sarasota Magazine
941-234-3597 Direct
srqbroker@gmail.com

 

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Loans Now Available 1 Year After Short Sale, Foreclosure, or Deed-In-Lieu

By | October 7, 2013

Rental PropertyThe FHA has waived its 3-year foreclosure waiting period.

Effective for FHA Case Numbers assigned on, or after, August 15, 2013, borrowers with a recent history of bankruptcy, foreclosure, judgment, short  sale, loan modification or deed-in-lieu can apply — and get FHA-approved — for an FHA-insured mortgage.

The FHA “Back To Work” Program Is Official

The Federal Housing Administration (FHA) was formed in 1934. 31 years later, in 1965, it became part of the U.S. Department of Housing & Urban Development (HUD).The FHA’s primary role is as an insurer of mortgage loans made by FHA-approved lenders. The FHA insures loans in all 50 states, all U.S. territories, and in the District of Columbia. Since its inception, the group has insured more than 34 million loans which makes the FHA the world’s
largest insurer of mortgages.

FHA mortgage insurance is available for any loan which meets the following two conditions :

1.   The loan must be made by an approved FHA lender
2.   The loan must meet the minimum standards of the “FHA Mortgage Guidelines”.

The minimum standards of the FHA mortgage guidelines are straight-forward. Some of the more well-known rules require mortgage applicants to show a minimum credit score of 500; to make a downpayment of at least 3.5% on a purchase; and, to verify income via W-2 or federal tax returns.

The guidelines also include such arcane topics as U.S. citizenship requirements for borrowers; relocation rules for trailing homes and income; and, minimum standards for condominiums and co-ops.

Loans failing to meet FHA mortgage guidelines do not get insured and the Federal Housing Administration has been steadily tightening its requirements since last decade’s housing downturn.

On August 15, 2013, though, the Federal Housing Administration moved to relax its guidelines for borrowers who “experienced periods of financial difficulty due to extenuating circumstances”.  Dubbed the “Back To Work – Extenuating Circumstances Program”, the FHA removed the
familiar waiting periods that typically followed a derogatory credit event.

If you’ve experienced any of the following financial difficulties, you may be program-eligible :
•     Pre-foreclosure sales
•     Short sales
•     Deed-in-lieu
•     Foreclosure
•     Chapter 7 bankruptcy
•     Chapter 13 bankruptcy
•     Loan modification
•     Forbearance agreements

The FHA realizes that, sometimes, credit events may be beyond your control, and that credit histories don’t always reflect a person’s true ability or willingness to pay on a mortgage.

The FHA Back To Work – Extenuating Circumstances Program

What is the FHA Back To Work – Extenuating Circumstances program?

The FHA Back To Work – Extenuating Circumstances program is the FHA’s “second chance” for mortgage applicants who have experienced financial hardship as a result of unemployment or severe reduction in income.

Can I use the Back to Work as a first-time home buyer?

Yes, you can use the program as a first-time buyer.

Can I use the Back To Work program as a repeat home buyer?

Yes, you can use the program as a repeat home buyer.

Can I use the Back To Work program for an FHA 203k construction loan?

Yes, you can use the program for an FHA 203k construction loan.

Does the FHA Back To Work program waive the traditional 3-year waiting
period after a foreclosure, short sale, or deed-in-lieu?

Yes, the program waives the agency’s three-year waiting period. You no longer need to wait three years to apply for an FHA loan after experiencing a foreclosure, short sale or deed-in-lieu.

Does the Back To Work program waive the traditional 2-year waiting period after bankruptcy?

Yes, the program waives the agency’s two-year waiting period. You no longer need to wait two years to apply for an FHA loan after experiencing a Chapter 7 or Chapter 13 bankruptcy.

Which types of “events” are covered by the FHA Back To Work – Extenuating Circumstances program?

The program can be used by anyone who’s experienced a pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification; or who has entered into a forbearance agreement.

How do I apply for the program?

You can apply for an FHA Back to Work – Extenuating Circumstances mortgage with any FHA-approved lender. The mortgage approval process is the same for any other FHA-insured mortgage.

What are mortgage rates for the FHA Back To Work program?

Mortgage rates are the same as mortgage rates for any other FHA loan. There is no premium on your interest rate, nor are there additional fees to pay at closing. Your mortgage rate will be unaffected by the FHA Back To Work program.
My current lender says that it’s not participating in the program? What do I do?

If your current lender is not participating in the FHA Back To Work program, you can find another lender. If you don’t know of another FHA-approved lender, you can get a mortgage rate here and see what you think.

What are the minimum eligibility requirements of the FHA Back To Work
program?

In order to qualify, you must meet several minimum eligibility standards. The first is that you must have experienced an “economic event” (e.g.; pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification, forbearance
agreement). The second is that you must demonstrate a full recovery from the event. And, third, you must agree to complete housing counseling prior to closing. You must also show that your household income declined by 20% or more for a period of at least 6 months, which coincided with the above “economic event”.

How do I document a 20% loss of household income for the FHA?

In order to document a 20% loss of household income, you must present federal tax returns or W-2s, or a written Verification of Employment evidencing prior income. For loss of income based on seasonal or part-time employment, two years of seasonal or part-time employment in the same field must be verified and documented as well. Income after the onset of the economic event, which should represent a loss of at least 20% for at least six months, should be verified according to standard FHA guidelines. This may include W-2s, pay stubs, unemployment income receipts, or other. Your lender will help you determine the best method of verification.

How do I document a “satisfactory” credit history since my “economic event”
for the FHA?

Your lender will review your credit report as part of the FHA Back To Work approval process.

All accounts will be reviewed — ones which went delinquent and ones which remained current. Your lender will attempt to determine three things — that you showed good credit history prior to the economic event; that your derogatory credit occurred after the onset of the economic event; and, that you have re-established a 12-month history of perfect payment history on major
accounts. Minor delinquencies are allowed on revolving accounts.

Does the “20 percent loss of income” eligibility condition apply to me only, or to everyone in the household?

The “20 percent loss of income” eligibility condition applies to everyone in the household. If one member of the household lost income as the result of a job less but the household income did not fall by 20 percent or more for a period of at least months, the borrower will not be FHA Extenuating Circumstances-eligible.

Is the FHA Back To Work Program limited by loan size?

No, the program is not limited by loan size. The FHA will always insure up to your area’s local FHA loan limit. Your lender, however, may not. If your lender will not make a loan big enough for your needs, find another FHA-approved lender. There are many of them.

With the FHA Back To Work Program, how soon until I can buy a home after foreclosure?

Via the program, you can buy a home 12 months after a foreclosure.

With the FHA Back To Work Program, how soon until I can buy a home after a short sale?

Via the program, you can buy a home 12 months after a short sale.

With the FHA Back To Work Program, how soon until I can buy a home after a deed-in-lieu of foreclosure?

Via the program, you can buy a home 12 months after a deed-in-lieu of foreclosure.

With the FHA Back To Work Program, how soon until I can buy a home after Chapter 7 bankruptcy?

Via the program, you can buy a home 12 months after filing for Chapter 13 bankruptcy.

With the FHA Back To Work Program, how soon until I can buy a home after Chapter 13 bankruptcy?

Via the program, you can buy a home 12 months after filing for Chapter 13 bankruptcy.

Is there a counseling requirement in order to use the FHA Back To Work program?

Yes, in order to the use the program, you must agree to attend housing counseling.

Will my housing counselor help me shop for mortgage rates?

No, your housing counselor will not help you shop for mortgage rates. However, many counselors can help you read a Good Faith Estimate which may help you make better lending decisions.

Why do I need to take housing counseling?

The housing counseling required by the FHA Back To Work program will address the cause of your economic event, and help you consider actions which may prevent reoccurance.

How long is the housing counseling session I am required to take?

The housing counseling required will typically last one hour.

Do I have to take housing counseling in-person?

No, you do not have to take the housing counseling in-person. Housing counseling may also be conducted by phone or via the internet.

If I complete counseling, am I automatically approved for the FHA loan?

No, you are not automatically approved for the FHA loan if you complete the housing counseling required. You must still qualify for the FHA mortgage based on Federal Housing Administration mortgage guidelines.

What is the minimum credit score requirement for the FHA Back To Work
program?

There is no minimum credit score requirement for the FHA Back To Work program, necessarily.

The program follows standard FHA mortgage guidelines. Credit scores below 500 are not allowed, but borrowers with no credit score whatsoever remain eligible. The Federal Housing Administration doesn’t change mortgage rates based on credit score.

Are modified mortgages eligible for FHA Back To Work?

Yes, modified mortgages are eligible.

Are loans on a payment plan eligible for FHA Back To Work?

Yes, loans on a payment plan are eligible.

I lost my job because my employer went out of business? Does this qualify for the program?

Yes, job loss resulting from an employer going out of business is Back-to-Work eligible. Your lender will ask you to provide a written termination notice or publicly-available documentation of the business closure.

Can I use Unemployment Income receipts to document that I was out of work?

Yes, you can use Unemployment Income receipt to document that you were out of work.

I am unemployed. Can I still use the program?

Yes, you can use the FHA Back To Work program if you are unemployed.

I am still in Chapter 13 bankruptcy. Do I need the court’s permission to enter into the mortgage?

Yes, if your Chapter 13 bankruptcy has not been discharged prior to the date of your loan application, you must have written permission from Bankruptcy Court to enter into the purchase transaction.

When does the FHA Back To Work – Extenuating Circumstances program end?

The FHA Back To Work – Extenuating Circumstances program ends September 30, 2016.

 

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Mortgage Rates On The Rise

By | July 30, 2013

Rates Up & Down

Rates Up & DownAlthough mortgage rates remain historically low, we have seen an upward surge in recent months. A 30-year fixed rate is fluctuating between low to mid 4 percent, which is the highest point we’ve seen in a couple years. In addition, greater consumer demand coupled with low inventory is resulting in increased home prices.

Visit bankrate.com to keep informed on current rates.

If you are seriously considering a home purchase, give me a call. We can discuss market trends and your real estate goals so I can assist you in the decision-making process.

 

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Mortgage Rates Set Record Lows

By | October 11, 2011

Freddie Mac released its Primary Mortgage Market Survey for the week of September 26-September 30 this morning. They found that mortgage rates set new record lows for the 5th straight week last week.

The average rate on a 30-year fixed-rate mortgage fell from 4.01% to 3.94%. 15-year fixed rates fell from 3.28% to 3.26%, while 5/1 year ARMs dropped six basis points to 2.96%. The one year ARM actually rose from 2.83% to 2.95%.

Although rates have risen slightly since this survey, they are still hovering right around record lows. The prospect of a technical double dip recession in the United States and the threat of a Greek default has caused investors to seek shelter in Treasury bonds and mortgage-backed securities, driving interest rates to record lows.

If you’ve been thinking about purchasing a new home or refinancing your current mortgage, now could be the time to do so. Fairway Funding Group has some of the lowest rates in the mortgage industry, consistently beating the national average. To find out more about our products and low rates, call us today at 941-993-8086.

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The Buying Power Of Cash (or, How To Pay For Something When You’re Flat Broke)

By | September 23, 2011

How To Pay CashThe beauty of being a cash buyer is that you’re considered the crème de la crème of the buying world.  Buyers want to be you; sellers want to know you; brokers want to break their backs for you.  But if you’re not a cash buyer?

What if you are one and didn’t know it?

Lots of our really savvy buyers take advantage of today’s record-low interest rates to do cash-out refinances on their properties in other states.  By tapping their home’s worth, they’re able to make cash offers for properties and pay much less for condos and foreclosures than they would if they secured a mortgage. (Check out our sidebar to see up-to-date interest rate information.)

Many lenders are requiring large downpayments for second, vacation, and investment homes. This is particularly true of condos, which have higher foreclosure rates and look riskier to banks.

In the real estate world, untapped equity = cash. And that’s your real estate tip for the day!

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Market Survey Shows Falling Mortgage Rates

By | September 15, 2011

For the second time in as many weeks, the rate on the 30-year fixed rate mortgage, the most common type of mortgage in the United States, has hit record lows according to Freddie Mac’s Primary Mortgage Market Survey.

The average contract rate on a 30-year FRM fell to 4.09%, down from 4.12% the week prior. The average rate on a 15-year fixed rate mortgage fell from 3.33% to 3.30%, while 5/1 ARMs rose slightly, from 2.96% to 2.99%. One-year ARMs dropped from 2.84% to 2.81%.

Mortgage rates have been falling as a result of rallies in the treasury and mortgage-backed securities market. These rallies were spurred by poor economic data in the United States and the possibility of an economic conflagration in Europe prompted by a possible Greek default. The possibility (or maybe even inevitability) of a Greek default would damage the major Euro-banks, which have huge exposure to Greece.

If you’ve been thinking about purchasing a new home or refinancing your current mortgage, now could be the time to do so. Fairway Funding Group has some of the lowest rates in the mortgage industry, consistently beating the national average. To find out more about our products and low rates, call us today at 941-993-8086.

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