Zac Hill

At the end of last week legislation was introduced that would put an 18-month moratorium on HVCC. H.R. 3044 would bring some welcome relief from HVCC.

I hope this takes us back to a time when local appraisers got to appraise local properties. I was very disappointed that the cost of an appraisal for my clients in creased while at the same time the revenue for my local appraisers decreased under HVCC.

The information we have about how this legislation will proceed and how quickly is limited at this point. You can read one news story about it here. I truly do hope the moratorium happens so that appraisers who do quality work can be rewarded with more business rather than getting orders simply because they are part of the pool.

There are several loan programs that have been born out of the Making Home Affordable plan put forth by the Obama administration. There are two distinctive refinance programs, one for Fannie Mae backed loans and another for Freddie Mac backed loans. The Fannie Mae refinance loan, the Fannie Mae DU Refi Plus loan, is available at many lenders and has similar pricing parameters as conventional loans that we have come accustomed to, like charging more fees or offering a higher rate to a borrower with a lower credit score for example.

The Freddie Mac version of the refinance loan, the Freddie Mac Relief Refinance Mortgage, is not nearly as available as the Fannie Mae program. The Freddie program has one limitation on the Fannie version. This limitation is that the new loan can only exceed the existing mortgage $2,500 to accommodate closing costs. This is a very minor limitation when you consider the large upside to the Freddie loan - it has an absence of rate and fee adjustments for almost every loan characteristic.

A 2-unit, non-owner occupied property gets the same rate for the same fees that a single-family, owner-occupied property does!!!!

A couple other things to point out about this program:

-The new loan is limited to 105% LTV, 105%!
-If the current loan does not have MI, the new loan won't either.
-This loan program is stated income - stated asset.

These programs are limited to rate and term refinances designed specifically to help borrowers lower they monthly mortgage payment, which encourages them to stay in their homes, reducing the number of foreclosures. If you or someone you know would like to determine if you qualify for this great program, start by determining if you are eligible here and who backs you loan here. Then call/email me with this info along who services your loan - the bank you make your payments to that you think "owns" your loan but really doesn't, which is probably a topic for a different post.

When this plan was announced by the Obama administration I was skeptical of its potential effectiveness to help people. While I still think the initial press release numbers of the plan helping as many as 7 to 9 million people is a bit over-zealous, I've changed my tune a little on the program as a whole.

We are now getting information on how this program is beginning to be implemented by lenders. If someone couldn't refinance to a better interest rate because they owed more than 80% of their home's current value, they may now have an option.

The programs are designed for more than borrowers of just single family residences. They can include rental properties, second homes, and multi-unit properties. In fact, one of these programs has better rates for an investment property than a conventional refinance loan!

The first step is determining if someone is eligible is determining who owns or guarantees their loan; Fannie Mae or Freddie Mac. They can determine this at a couple of loan look up tools here. I've been told that the Fannie Mae look up tool is a bit touchy and can return a false negative much easier than the Freddie Mac tool, so if both look up tools come back negative, I'd recommend calling the Fannie Mae phone number.

Unfortunately there are some loan types that don't yet qualify under these programs. These programs are designed for rate & term refinances only and can't be used to get cash back at closing. FHA is another great example. FHA already has a streamline refinance that doesn't require and appraisal so a program is already in place to aid in helping FHA borrowers refinance to lower rates.

Yesterday President Obama encouraged people to take advantage of the near record low interest rates to refinance if they could. I'd echo his sentiment. Please contact me if you or your clients have any questions on the new Making Home Affordable program.

Lots of positive financial news out there this week:

1. Existing home sales rose 5.1% in February
2. Proposed changes to accounting rules, specifically the "mark-to-market" rule
3. Orders for manufactured goods rose 1.8% in February

All of this spurred the Dow to rise and give us the third day of positive movement, temporarily pushing the Dow above 8,000 for the first time in 2 months.

The significant monthly unemployment report is due out tomorrow however and negative numbers are predicted.

I think all of this signals that the bottom is behind us or near and that we may be looking at the other side of the rebuilding and regrowing. This is significant to us because this probably means home buyers that aren't out there already may not get in until the upswing and rates may be starting to tick back up again into the 5%'s. (Yeah I said UP to the 5%'s.) I've stated many times that if the media starts saying we are more healthy and growing, we will be. We need the positive message, keep 'em coming!

I've listened to several of Dave Ramsey's radio shows over the years. Although I do agree with many of his financial principals, I'm not the biggest fan of his. I've been told I may have a different perspective toward him if I went through one of his studies. I feel like he has a course of action he sells, or recommends, to everyone regardless of their circumstances. I'm not a cookie cutter kind of guy.

So I saw Dave on the news this morning. (It was on CNN, CNBC or Fox but I can't remember. Maybe I can get some help on this in the comments?) He was fielding questions about the real estate market and financing. It was a short interview but his passion to his points were a bit surprising. Here are a few of the keys he passed along:

-Now is the best time to buy a house in the last fifty years.
-He has a sense from his real estate professional network that the market has bottomed out already.
-Someone would have to be a fool not to refinance right now with how low the interest rates are.

I think the message is starting to get out loud and clear that it is a good time to buy a home, I hope people are listening.