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This week’s Georgia mortgage news you can use

My friend Jeff at Fairfield Mortgage provides his weekly update…

Mortgage Minute and the monthly video review

HARP is an acronym for the government sponsored Home Affordable Refinance Program.  In this month’s Mortgage Minute, Shelter Mortgage President Jill Belconis talks about the latest changes to HARP and how “upside-down” homeowners nation wide will have a better chance of refinancing Fannie Mae and Freddie Mac loans starting this spring.  Who is Fannie Mae anyway?  We also asked people on the street if they knew who Fannie Mae was and their answers might surprise you.

Click here to watch this month’s short video:

FHA Contemplating Reduced Seller Paid Concessions

On Friday, FHA released a letter proposing that the maximum allowable seller concessions be reduced from the current 6% limit to something less.  FHA is contemplating this change to “better manage risk” as they feel the current level exposes the FHA and borrowers to excess risk by creating an incentive that inflates the appraised value.  FHA first mentioned this as a possibility all the way back on July 15, 2010.  After bringing up the possibility of such a reduction a full year and a half ago, nothing has been heard from FHA again on the subject, until now.  Reducing how much of the buyer’s costs that the seller can pay at closing would be a major blow to the real estate industry.  Reducing this limit from 6% to say 3% would require most FHA buyers to bring more money to the table, to the tune of several thousand more $’s.  This is money they simply don’t have in many cases.  The official proposal will be finalized soon and then there will be a 30 day comment period in which we’ll be able to make lots of noise.  Hopefully, our industry lobbyists will show up in a big way and keep this limit from decreasing!  I will send you more info on how you can make your feelings known about this once the proposal is officially issued.

In the same announcement, FHA also mentioned they may soon require indemnification for “serious and material” violations of FHA originated loans.  This means that any inaccuracy in a loan file could be interpreted as fraud or misrepresentation and cause the lender to have to repurchase the loan.  A few of these repurchases could put a small lender out of business.  Stated another way, FHA is proposing to make it harder for lenders to make FHA loans.  Just what we don’t need right now!

What Every Lender Wants the Realtor to Know When Writing a Contract: Tip #8

When writing a contract, be thorough and make sure you complete all of the applicable Exhibits
.  If your buyer is obtaining an FHA or VA loan, be sure to include the FHA or VA Exhibit.  Be aware that these forms cannot be dated after the binding contract date!  Also, always make sure the Community Association Exhibit is complete and accurate, especially the HOA initiation and monthly fee.  Be aware that the lender is closely analyzing the information on this form, so if you just wing it and all of the info is not accurate, there could be problems later.

One additional good tip:  if the property is a condo, proactively give the lender the person’s contact information who can complete a Condo Questionnaire on the front end of the transaction.  Every lender needs a variation of this form completed if the property is a condo.  The sooner you get the contact information to the lender, the quicker they can identify any potential problems!

Rate Update: Good Economic News Bad for Mortgage Rates

An improving US economic outlook was negative for mortgage rates over the last week.  Reduced concerns about Europe also caused a partial reversal in the “flight to safety” trade.  As a result, mortgage rates ended the week higher.

Early in the month, the December Employment report showed a larger than expected increase of 200K jobs, and the Unemployment Rate continued to move lower.  Last week, Weekly Jobless Claims fell to the lowest level since April 2008.  The labor market is one of the most important factors in the health of the economy, and many investors now view the outlook as brighter than it has been since the financial crisis began.  If this is the case, it will be great news for the economy, and job gains will increase the willingness and the ability of people to purchase homes.

The Housing sector data released last week was encouraging as well.  January Existing Home Sales increased 5%, while the inventory of unsold homes declined 9%, to the lowest level since March 2005.  December Housing Starts for single-family units increased 4%, and Building Permits for single-family units rose 2%.  Finally, the January NAHB Home Builder confidence index rose for a fourth consecutive month to the highest level since 2007.

Improving economic conditions, high affordability levels, and low mortgage rates are three solid reasons to be optimistic about the housing market.


Looking Ahead
The most significant economic report will be Friday’s GDP data for the fourth quarter.  GDP is the broadest measure of economic activity.  Before that, Pending Home Sales will be released on Wednesday and Durable Orders and New Home Sales on Thursday.  Leading Indicators and Consumer Sentiment round out the schedule.  In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday

Please call me if you have questions about real estate financing – I’ll point you in the right direction!

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