Looks like the NEW home buyer tax credit is ABOUT to be approved:

$8000 Tax Credit Possibly Extended For Military Personal

No news yet about the possible extension of the $8,000 Federal Tax Credit beyond November 30, 2009 for all first time home buyers, but the House of Representatives has voted unanimously to extend the first time buyer tax credit to active military personnel, foreign service and intelligence officers. The bill (HR3950) would extend the existing tax credit to this group only until November 30th, 2010.  The bill now goes to the Senate, and is expected to pass with the same ease.

The bill was brought up because it was thought that military personal serving oversees this year did not have the same opportunity to take advantage of the tax credit as other future home owners. The extension applies to military personnel who spent at least 90 days of the current calendar year oversees.  It also does not require borrowers to payback the tax credit if they are deployed after receiving it.  The current tax credit requires borrowers payback the tax credit if they do not occupy the home within three years of receiving the tax credit.

THIS IS NOT LAW as of the time of this posting, but should be soon.

Combining the $8000 federal tax credit with a VA 30-year fixed loan is something I as a loan officer and Mortgages Unlimited are proud to be able to offer all military personal, both active and discharged, for properties located in the Minneapolis St Paul area, and all of Minnesota and Wisconsin.

FHA Changes Streamline Refinance Rules - makes it harder!

FHA streamline refinance has always been a great tool for home owners. In the most simple format, a person who currently has an FHA loan could fill out some paperwork, and close a new loan shortly thereafter with a new lower rate (payment), and with no out of pocket closing costs.

As long as the person had made their past 12 FHA loan payments on time, and had a job, you were approved. There was no appraisal, no credit score requirement, and no income or asset documents required. The client still has normal closing costs, but they could be rolled into the new loan.

The new rule revises current procedures for streamline refinance transactions to establish new requirements for loan seasoning, payment history, income verification, and demonstration of net tangible benefit to the borrower. It also provide for collection of credit score information; and to cap maximum loan-to-value at 125 percent.

A BIG CHANGE IN THE RULES will be that in order to roll in the closing costs, an appraisal will now be REQUIRED. If the loan-to-value is UNDER 125%, this shouldn't be an issue other than they now have the added cost of an appraisal. If the customer wishes to pay closing costs out-of-pocket with cash at the closing, then an appraisal will NOT be required. This rule alone will effectively kill FHA streamline refinances as we know them today as EVERYONE rolls closing costs into their new loan.

These revisions also bring NEW documentation standards for streamline refinance transactions in line with other FHA loan origination guidelines, ensures the borrower's capacity to repay the new mortgage, and prohibits the dangerous practice of loan churning, where borrowers raise cash through successive cash-out refinancing that put them further in debt.

These new rules are in part due to the increasing level of FHA foreclosures. FHA doesn't actually provide loans, rather, it guarantees loans for lenders in exchange for lenders taking on higher risk, lower credit score, and small down payment home buyers according to FHA guidelines. FHA foreclosures have increased steadily recently as the mortgage industry no longer offers sub-prime and exotic loans, leaving many potential home buyers with no other option BUT FHA.

Worried about the changes? Apply now before they go in effect!

MORTGAGE INTEREST RATES ARE GREAT TODAY. BUT WHAT ABOUT TOMORROW?

Let's face it, mortgage interest rates have been averaging in the low 5% range, and that is great for the real estate market. But do you know where mortgage interest rates come from and why they change?

Lenders don't just make up rates! Long-term interest rates are based on Mortgage Backed Securities, also known as Mortgage Bonds. As money flows in and out of the bond market, the bond "yield" changes and the corresponding interest rate goes up or down.

May people think the 10-year Treasury Note is the correct index to "follow rates" with. While this note usually trends in he same directs as Mortgage Bonds, it is not unusual to see them move in completely opposite diretions. Be careful not to work with a Loan Officer who has their eyes on the wrong indicators.

This is a bit simplistic, but you can look at Fannie Mae and Freddie Mac as a clearing house which "buys" loans from lenders based upon rules they make, then package those loans into Mortgage Bonds, which the public buys on the bond market.

With everything going on in the mortgage world, bond players ramped DOWN the purchase of Mortgage Backed Securities. If no one buys Mortgage Bonds, there is no money for Fannie and Freddie to buy loans from lenders. If lenders can't sell the notes, they run out of money, the supply dries up, and consumers can no longer get a mortgage loan.

With no confidence in the mortgage market, bond players simply stopped buying mortgage back securities, creating a huge liquidity problem in 2007 and 2008.

In order to calm, and ease the strain on the markets, the US Treasury Department started buying up to $1.25 trillion worth of Mortgage Backed Securities which would help keep money flowing to the mortgage markets. By spring 2009, the Treasury Department was buying 2/3rds of all mortgage bonds, which has kept 30-year fixed mortgage rates artificially low.

The overall mortgage bond market has started to improve, and confidence is starting to return because "new loans" are being written to more traditional safer and strictor guidelines. Traditional private sector bond players have started to again purchase mortgage bonds, which is good, as the money pledged by the Treasury to buy bonds in expected to run out over the next few months.

Once the Treasury Department stops buying bonds, all bets are off as to what interest rates will do. If the private market continues to increase their rate of buying bonds, interest rates should continue to stay low, or increase slightly. If the private-sector doesn't carry the load, expect to see mortgage interest rates climb.

While it is too early to know exactly what is going to happen, but if you are on the fence about buying a new home or refinancing an existing home, I'd suggest you take advantage of today's mortgage interest rates RIGHT NOW.

By far, the #1 Mistake is choosing a lender simply because they are recommended by your Realtor, or using the Realtor's affiliated companies. While your real estate agent has basic mortgage knowledge, your Realtor is not a mortgage finance expert! They are trained & licensed to help you buy & sell homes. They are NOT trained in mortgage financing! They may not know what's the best loan for you. The Realtor only gets a commission when your house closes. As a result, the Realtor may refer you to a lender that is sure to close the loan, but not necessarily the lender that has favorable rates or fees. Also, many Realtors refer you to their friends in the loan business––who again may not be able to get the best loan for you. Even if the Realtor is very professional and looking out for your best interest, you should still do homework on your own.

WARNING: Be wary of "affiliated companies" (Example: XYZ Realty Company, XYZ Mortgage, and XYZ Title Company). Usually all in the same building, and all owned by the same people. Although it is very convenient to use the affiliated lender and title company across the hall, you typically PAY for that convenience with higher rates and fees than you could find elsewhere. Sometimes the Realtor makes it sound as if you have to use their affiliated companies. YOU DON'T.

A very large portion of my business comes from Realtors referring clients to us (and we appreciate it!) But if you are already approved with a lender, and your Realtor or Builder is now 'pushing', 'forcing' or speaking negatively about your choice while pushing hard for you to use their lender or title company, it almost always means you pay more! 

If your Realtor walked you across the hall to get approved with their in house lender, and you haven't gotten a SECOND OPINION, call me right now! You are entitled to a second opinion, even if you have already been pre-approved for your mortgage with them!

The new "Mortgage Disclosure Improvement Act" (MDIA) starts next week (July 30 2009) and will likely seriously delay closings - especially over the next few months as unprepared lenders everywhere drop the ball until they all get comfortable and familiar with the new APR (Truth-in-Lending) disclosures. 

Learn what you need to know by watching this quick video at http://www.thinkbigworksmall.com/mypage/player/tbws/12733/1110605

The Federal Reserve Board changes to consumer protection regulations for APR disclosure, while mandated with good intention, will certainly cause delays right at the last moment as FINAL numbers used to prepare the ACTUAL APR are not always known until the last moment. The new rules have such a tight tolerance that lenders will almost ALWAYS have to be redisclosed, and DELAY THE CLOSING while everyone waits for the 3 day waiting period to pass.

The Federal Reserve Board approved final rules that revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending) . Regulation Z is a consumer protection regulation that requires lender disclosure of the cost of financing a home, and has been revised to provide greater consumer protection.  The revisions are an amendment to the Truth in Lending Act (TILA) called the Mortgage Disclosure Improvement Act (MDIA) .   The MDIA covers primary residences and second home applications made on or after July 30, 2009, and requires that lenders provide disclosures earlier in the mortgage process.   The MDIA requires the following waiting periods:

• Lenders must give good faith estimates of mortgage loan costs ("early disclosures") within three business days after receiving an application for a mortgage loan (unchanged from current rules). The only fee that can be collected within this three day period is a nominal credit report fee.  
• Lenders must wait seven business days after they provide these early disclosures before closing the loan (usually not a problem, as it takes longer than that to get every done anyway).
• If there are any changes during processing to the terms or cost of the mortgage, lenders are required to give a new disclosure with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan. A change that results in an increase to the APR of 0.125% requires re-disclosure. Closing can occur no sooner than three business days after re-disclosure. "Business days" include Monday - Saturday (excluding holidays).

The burden of proof is on the lender to deliver disclosures and most will not want to make exceptions in fear of closing a loan that is out of compliance.   Responsible lenders have already been doing this disclosure/re-disclosure all along. On most transactions, the actual increased time required to process loans due to MDIA may be three to seven days.  

Plan on additional delays in closing your next real estate transaction as lenders adhere to the new law. 

We are ready and fully prepared for the changes. Remember the lender choice reflects heavily on your future referrals. Once a deal is on the table, time becomes a critical factor.  Any delay or hiccup could mean that the deal doesn't get done.  There's nothing more frustrating than having a deal on the table that falls apart because it doesn't seem to be a priority to the lender who is too busy for your deal while he works on some refinances, or hasn't figured out the new laws.

That's why I make it a habit to make your problems, my problems; your obstacles become my obstacles.  And I work tirelessly to get your deals funded.  For properties in Minnesota or Wisconsin Only, 7 days a week, call (651) 552-3681, or E-mail me your questions.

- Joe Metzler, MMS

WHITE HOUSE WIDENING MORTGAGE REFINANCE RELIEF PROGRAM

The Obama administration has made changes recently to the current homeowner bailout program available to homeowners who are underwater on their home mortgage loans in an effort to stem the foreclosure problem.

The program is designed to allow homeowners to refinance to today's lower interest rates when under normal and traditional underwriting guidelines, they would not be able to do so.

The current program would allow strapped borrowers with mortgages up to 105% of their homes value as long as they were not behind on their mortgages. The changes just made allow borrowers to now have up to 125% loan-to-value and still be able to refiance.

BUT HOLD ON. While this sounds great on the surface, and while there has been a lot of consumer interest, the program has not come even close to expectations, helping significantly fewer people than Washington anticipated. It is because of these failures that they have expanded the loan-to-value limits.

This programs failures comes on the heals of two previously highly announced homeowner bailout programs called FHASecure and Hope For Homeowners, which both failed miserably in helping consumers.

Why do they fail? A huge issue on the current program has been that so many people owe more than 105% of the current value of their home. So this change should help qualify more people.

With this and the other programs, there is no lender mandate forcing lenders to participate. Many lenders understand giving people 100% (or higher) loans were part of the original problem, and simply refuse to offer the loans.

Underlying guidelines, shall we say "the small print" is also preventing many people from taking advantage of these programs.

In the end, while this announcement should help a lot more people, I also see this program being labeled a failure.

NOTE: If you previously tried refinancing, and you were OVER 105%, but UNDER 125%, please contact us to apply again! (we lend in MN, and WI only)

For more information on the "Making Homes Affordable Program", simply follow this link:

http://www.metzlermortgage.com/makinghomesaffordablerefi

FHA ANNOUNCES CONSUMERS CAN USE THE $8000 TAX CREDIT FOR DOWN PAYMENT

Consumers across the country are now being told they can take advantage of a Federal Housing Administration program to allow qualified home buyers to apply the $8,000 tax credit when purchasing a home.

FHA has said it will now permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger down payment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate.

BUT WAIT: Don't get too excited, as nothing from Washington is this easy!

FIRST: if you read the actual Mortgagee letter from HUD, it says "AFTER you contribute your normal and required 3.50% down payment, you can use the $8,000 for a BIGGER down payment." WOW...  What a joke Washington! This will have little effect for most buyers.

SECOND: You CAN use the money for closing costs - but most people already just "roll it in", so this option is of little significant help

THIRD: We still need to see how the lenders and banks respond and roll this out to actual Main Street home buyers. We also have to see how the ‘bridge loan' companies respond to this and how they will implement this.

Who is going to lend this short-term money, where is it coming from, how much are they going to charge, how to do you get approved? These and more questions all need to get answered before anyone gets too excited about this news.

We also suspect that the $8000 "loan" minus any fees to get this early from the bridge company won't come cheap!

I think this is a good idea, but clearly Washington has misses the mark (AGAIN), and this deal stinks. We only need the recent examples of FHASecure and Hope For Homeowners to see that what sounds good in Washington doesn't usually play out so good for Main Street.

So while this is good news, it is NOT the homerun that some of us were hoping for - at least not yet.

We've been receiving calls all day about the "announced" ability to use the $8000 first-time homebuyer tax credit FOR DOWN PAYMENT. "

HOLD YOUR HORSES... it doesn't exist.... YET!
 
HUD Secretary Donovan appeared at a NAR function earlier today, and this is an exact excerpt of his remarks:
 
"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly."
 
Okay - so what does that MEAN?  It means that they are about to "officially" put their stamp on approving the process (and authority) on who/where/why/when a first-time homebuyer can get a LOAN for the $8000 tax credit - to be used as part of the required down payment!
 
THIS IS HUGE! As soon as the "official" announcement is out, we will get it to you.

The Death of Private Mortgage Insurance Companies

Ahhh the ever hated PMI on your home loan. The necessary evil. Is it going away?

Private Mortgage Insurance (PMI)? It is (was) an insurance policy required by mortgage lenders on conventional loans when the borrower had a loan-to-value (LTV) greater than 80%. PMI was established to help borrowers with little cash buy or refinance houses. I always called it the necessary evil. The rules were simple. If you didn't have 20% down, you didn't get a loan.

To get the loan, lenders required an extra bit of insurance to protect them, but YOU had to pay for it. The less down payment, the more expensive PMI is as your risk as a borrower went higher.

Then along came 2nd mortgages and home equity lines of credit. With these loans, home owners attempted to skirt PMI by dividing up their loan into two. The first mortgage at 80% loan-to-value or less, and therefore no PMI, plus a second mortgage to cover the difference.

Terms such as 80/10/10, 80/15/5 and 80/20 became common and PMI became an afterthought as people thought they had beaten the lenders. The reality was that for many people, the perceived savings were false, as the second mortgages came at a dramatically higher rate, or with higher risk. I can tell you many stories of people caught with their pants down as the "great rate" on the second mortgage climbed higher and higher. The payments ended up far surpassing the "savings" of avoiding PMI.

OTHER HIDDEN COSTS ABOUND: Most first lien lenders charged you a higher rate on your first mortgage because they knew what you were doing, and you really not any less risky by having two loans. For example, if you had taken a loan WITH PMI, your rate may have been 6.00%, but by doing an 80/10, your first mortgage rate was 6.25%. Also, those second mortgages were never free in terms of closing costs. For many people, the extra closing cost of getting the second mortgage completely ate up all the benefits.

Of course each individual transaction is different, and while some truly gained benefit from two loans, few people ever did the real math to determined the true total cost of their loans over time. Plus, they almost never calculated in the fact that private mortgage insurance can be dropped once your loan-to-value reached 80%.

BEHIND THE MAGIC CURTAIN: Something few borrowers understand about the mortgage industry is who actually underwrites loans. For many, the underwriter is actually employed by the private mortgage insurance company, not the actual lender. In simplistic terms, this puts the PMI company on the additional hook for bad underwriting and adds another layer of protecting to the lender. Because of this, while the lenders typically follow Fannie Mae or Freddie Mac guidelines, the PMI company can add their own ADDITIONAL guidelines on top of Fannie and Freddie rules. These additional private mortgage insurance company add on rules have become a major lending industry issue recently, making getting a loan for many, much more difficult.

WHO CAN BLAME THEM?  PMI companies are losing $ Billions of dollars to lender claims, and 2nd mortgages and home equity lines are a thing of the past, thrusting PMI companies back into the "only game in town" position as lenders look to reduce their risk. I would anticipate within a short-time, that the private mortgage insurance (PMI) companies will not exist as we know them today, throwing further turmoil into the housing market

NO PMI? NOW WHAT? If the PMI companies die, will you be able to get a loan with less than 20% down or equity in the future? Sure, but I would assume that instead of PMI on your loan, you will probably have some sort of lender self-insured policies which will probably come in the form of dramatically higher rates.

We shall see...

What does this mean for homebuyers and homeowners wanting to get a loan with less than 20% equity in the property? MOVE NOW, and be sure working with a professional loan officer who can properly analyze your individual situation and explain current market conditions. This is almost never the guy quoting the lowest interest rate or the guy answering the phone on some big lender 800 phone number.

Call me with any questions you have concerning the current market.

Obama Making Homes Affordable Refinance program details

Making Home Affordable Program Details

The Obama Administration unveiled the final details of its "Making Home Affordable Program," which is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future.

One of the initiatives in this program is aimed at helping responsible homeowners "refinance" their loans to take advantage of historically low interest rates. Here are some common Questions and Answers about the Refinancing Initiative in the program.

REFINANCING INITIATIVE

Who is eligible? You may be eligible if:

How do I know if my loan is owned or controlled by Fannie Mae or Freddie Mac?

Simply call or email me. I'll help you determine if your mortgage is backed by Fannie Mae or Freddie Mac.

I owe more than my property is worth. Do I still qualify to refinance under the Making Home Affordable Program?

Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.

If I am delinquent on my mortgage, do I still qualify for the Refinance Initiative?

No. But the good news is, you may qualify for the Modification Initiative. Contact me to discuss your situation and review your options.

I have both a first and a second mortgage. Do I still qualify to refinance under Making Home Affordable?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible for the Refinance Initiative.

Will refinancing lower my payments?

That depends. If your interest rate is much higher than the current market rate, you would likely see an immediate reduction in your payment amount.

However, if you are paying interest only on your mortgage, you may not see your payment go down. BUT... you will be able to avoid future mortgage payment increases and may save a great deal over the life of the loan.

What are the terms of the refinance and what will the interest rate be?

All loans refinanced under the plan will have a 30- or 15- year term with a fixed interest rate.

The interest rate will be based on market rates at the time of the refinance. Currently, interest rates are at historical lows, which makes this a good time to examine your refinancing options.

Will refinancing reduce the amount that I owe on my loan?

No. Refinancing will not reduce the principal amount you owe. However, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

Can I get cash out to pay other debts?

No. Only transaction costs, such as the cost of an appraisal or title report may be included in the refinanced amount.

How do I apply for the Refinance Initiative?

Call or email me today to discuss your specific situation and to examine your options. If this plan is right for you, we can begin working on your refinance immediately. PLEASE UNDERSTAND FULL DETAILS HAVE NOT YET BEEN RELEASED TO US, and while we will start taking applications, we will have to wait just a bit for full details and the program to be implemented internally.

As part of the discussion, we may need to look at the following information:

• Recent pay stubs to help determine your gross (before tax) household income.
• Your most recent income tax return.
• Information about any second mortgage on your house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all other debts, such as student loans and car loans.

As always, if you have any questions or would like to discuss how this may specifically impact you, I'd be happy to sit down with you. Just call or email me to set up an appointment.

If you are a homeowner who is current on your mortgage payments but unable to refinance to a lower interest rate because your home value has decreased, you may be able to refinance.

Do I qualify for a Making Home Affordable refinance? Answer these questions:

1. Is your home your primary residence?
2. Do you have a Fannie Mae or Freddie Mac loan? If you don't know contact:
   • Fannie Mae,
     • 1-800-7FANNIE (8am to 8pm EST).
     • www.fanniemae.com/homeaffordable
   • Freddie Mac 
     • 1-800-FREDDIE (8am to 8pm EST)
     • www.freddiemac.com/avoidforeclosure/
3. Are you current on your mortgage payments?
    
   • "Current" means that you haven't been more than 30-days late on your mortgage payment in the last 12 months.
4. Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house?

IF YOU ANSWERED YES TO THESE FOUR QUESTIONS, YOU PROBABLY QUALIFY

Contact your local lender for more information

In MINNESOTA and WISCONSIN? You can Apply Online 24/7

FOR MORE INFORMATION, Visit www.FinancialStability.gov

If you snooze, you may lose. Helping you avoid costly mortgage mistakes.

The Fed's been at it again, offering words that sound encouraging at first blush, confirming that their buying program of Mortgage Backed Securities is in full swing and will continue as needed. Of course, the media will pick this up and offer their own interpretation, saying "Good news, the Fed's words on continuing their purchasing program mean that rates will continue to drop lower, and remain low into the summer..." But is this really what that means? Not so.

Here's the truth.

Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds...which won't have much of an impact on present interest rates. Why? First, see the Fed's purchases for yourself by hitting this link: Direct Link to View Fed Mortgage Bond Buying - http://www.newyorkfed.org/markets/mbs/index.html.

So why is the Fed buying these Bonds? Well if you think about it, it's very smart of the Fed...and maybe even a little sneaky...because 5.5% Bonds actually represent outstanding mortgages with rates of 6 - 6.50%, which are precisely the loans being refinanced at today's great interest rates.

Stay with me here...

With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today's low rates.

Here's the most important part.

Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.

The clincher is this:

Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month - think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner - or in the example used, $250 - for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.

I don't want anyone to miss an opportunity by either waiting, or not understanding what is at stake. Let's talk further on this - call or email me and let's discuss what this might mean for you.

Better yet, apply online right now. You'll be closed and safely enjoying these low rates next month!

Blue Collar Common Sense Starts Again This Month

 is back on the air with his trademark "Blue Collar Common Sense." Beginning Monday, January 19th. Dan is bringing some familiar characters to the new program. Super Dave will produce the show and Bill Snyder will be sitting in from time to time.

The flagship station for this new syndicated program is Radio for Wright County, AM 1360 KRWC, in the Minneapolis / Saint Paul, Minnesota area. Visit his new web site at www.DanConry.com.

Blue Collar Common Sense hits the air mornings from 7:00 to 9:20 and will be live-streamed and podcast.

Raised in Flatbush Brooklyn in what he calls his crazy Irish family, Dan developed his street smarts & well known self deprecating sense of humor that we have all come to enjoy over the years here in Minnesota. Dan realized his goal of becoming a Police Officer & joined the NYPD in the 1980s. After several years as a street cop in Brooklyn, he became an undercover narcotics Detective in Manhattan. Dan retired from the NYPD after a line of duty injury.

Shortly after a personal relationship brought Dan to Minnesota, A dinner at the St Paul Hotel, along with timing, luck and serendipity, brought Dan to the attention of the powers that be at KSTP AM 1500. A few weeks later, he was sitting in for evening & weekend hosts and soon joined Twin Cities Attorney Ron Rosenbaum. The duo became one of the most popular shows on radio. The pair joined Mark O'Connell after the terrorist attacks in 2001 and hosted the show immediately following the 9-11 tragedy. After this, Dan hosted a morning show at WMEL Melbourne Florida until 2005 when he returned to Minnesota radio on KTLK. From Ground Zero to the 35W bridge tragedy, Dan has cemented his reputation as a reporter and his ability to personally connect with listeners like no other radio host.

Dan who was most recently heard on KTLK, not only hosted his very popular morning show, but was also the steady sub-host for Minnesota radio icon Jason Lewis, as Jason became a steady sub for Rush Limbaugh.

Now engaged to a Minnesota gal & attending St Mary's University, Dan is in Minnesota to stay! So we invite you to join Dan Conry boadcasting live from the new Minnesota Majority studio on Radio for Wright County AM 1360 KRWC. The show can also be heard by live internet stream and podcasts.

What does this post have to do with a mortgage blog you ask? The Joe Metzler Group at Mortgages Unlimited is proud to be one of the inital sponsors and we WISH DAN CONRY great success.

FICO CREDIT SCORE GRADE AND FORECLOSURE RISK BY THE NUMBERS

Just something to think about...

GRADE
AA = over 760
A = 720 - 759
B = 680 - 719
C = 640 - 679
D = 600 - 639
E = 560 - 599
F = 520 - 559

AVERAGES
2% of the population have scores under 499
5% of the population has a 500 - 549 score
8% of the population has a 550 - 599 score
12% of the population has a 600 - 649 score
15% of the population has a 650 to 699 score
18% of the population has a 700 - 749 score
27% of the population has a 750 - 750 - 799 score
13% of the population has over 800 scores

FORECLOSURE RISK
1 in 588 for Standard Conforming Fixed
1 in 189 for Standard Conforming ARM
1 in 147 for FHA Fixed
1 in 101 for FHA ARM
1 in 244 for VA
1 in 77 for Subprime Fixed
1 in 31 for Subprime ARM

Thinking of refinancing to today's great rates? BEWARE before you commit!

Saint Paul, Minnesota: Real 30-year fixed interest rates without discount points have been hovering right about 5% lately for those with high credit scores and plenty of equity. Lender phones are ringing off the hook with mortgage refinance applications at their highest level in more than 5-years!

While this sounds great, applications don't necessarily equal loan closings. A monstrous black cloud is about to burst on many unsuspecting applicants.

Two major issues are crushing refinance dreams as after application, many borrowers are finding out they do not have the equity position or credit to actually get a great deal closed.

A prime example is a customer of mine who bought a new home in October 2006. At the time, he put 25% down from the sale of his previous home. Today, I would be able to lower his interest rate about 1.25%. This would save him approximately $202 per month. Payback for closing costs is under two years, and he plans on living in the home a long time. Therefore this customer would appear ripe for a refinance.

Problem one? His property value has dropped to a level where his NEW loan would have a loan-to-value of 90% (a loss of 15% in value).

I now have to add mortgage insurance to his loan, MAKING HIS NEW GREAT RATE REFINANCE PAYMENT GO UP. Dead deal.

Problem two? Credit score requirements. Another recent customer has a first and second loan he wants to refinance into one new loan at today's great rates. He has heard all the rate news and is ready to take advantage, as he THINKS he could lower his rate 1.25%.

In years past, if you qualified for a conforming loan, everyone got the same conforming rate. It didn't matter if your score was a 620, or an 800. Today, you may get a conforming loan, but rates vary greatly depending on your personal situation.

In my example case, because we are paying off a second mortgage, this is considered a higher risk "cash out" transaction. His middle credit score was just 659. Therefore, while I could do the loan, his rate would have been 5.875%, down just 1/4%. Dead deal.

Bad lender problems too. To further complicate matters, and to potentially throw more egg on the mortgage industry face, inexperienced and bad lenders once again are promising the world to customers without doing a proper analysis of the customers situation.

Many of these lenders demand $300 - $500 non-refundable application fees, then send an appraiser to the customers home. The appraisers are told to collect their fee "at the door".

Two weeks later, the customer is told one of the two examples above, and that their great deal isn't so great after all.

DON'T LET THIS BE YOU.  Make sure you are working with a true professional Loan Officer and Mortgage Company. Make sure you ask about credit scores and talk about estimated property values and how they may effect your great deal.

DO NOT EVER PAY APPLICATIONS FEES, and DON'T believe everything you hear, especially from a telemarketer. There are plenty of sharks still left in the mortgage sea.

With a little customer knowledge, you may be able to take advantage of today's rates, or save yourself unnecessary application fees and appraisal costs.

© 2009 Metzler Group. 

Should you be buying a home, modifying your existing loan, refinancing, or running away?

Saint Paul, MN: These are certainly trying times, and 70% of homeowners have some sort of financing on their home. The economy is hurting, and fear of job loss is on many minds. But what you should be doing in today's market isn't always clear.

The economy is hurting largely because of the initial wave of foreclosures and high gas prices of earlier in 2008. This has spilling over into all aspects of American lives, but is it really as bad as the constant beat of the media drum has one to believe?

Unemployment nationwide is averaging in the 6% range. This is significantly below the highs of years past. retailer are reporting bad Christmas numbers, down some 6-8%. Foreclosures are still at historic high levels. These reports sound bad, but sit back and take a look at your own individual lives to examine if it really is bad for you and what you should be doing.

For example, while possible job loss is on a lot of minds, examine your own ability to market yourself? No job is guaranteed. If you did lose your job, how quickly can you replace it with a similar income, even if in a different field.

I am in the mortgage business, which clearly is suffering. I don't worry about my home or income, because I know that if needed, I would take two or three jobs (even menial jobs) to always make sure my family has the three most important items: Shelter, food, and clothing. I know I can cut off cable TV, sell cars, cut expenses, and go into survival mode and that I will always be able to provide the basics.

If unemployment is averaging 6%, this means 94% of people are working. If foreclosures are averaging 10% of homes, this means 90% of people are OK. Turn off the TV, stop reading the paper. If you didn't hear and read all the "bad news", how would YOU personally view your situation?

BUYING A HOME: We all need a place to live. Home prices are extremely attractive, with great deals to be found everywhere. Mortgage rates are near historic lows. If you have OK or better credit, can come up with a small down payment, plan on staying in the home for at least four years, you are almost foolish to not buy something TODAY.

Many people bought homes they shouldn't have and took risky loans to do so. Simply because a lender said yes, doesn't mean you should have. Even more people who originally bought right used their homes as ATM machines, with a constant "cash out" refinance to pay credit cards and live lifestyles they couldn't afford. I just spoke with a customer who bought this home 15-years ago for $85,000 who is losing it to foreclosure owing $300,000.

MODIFYING YOUR EXISTING LOAN: As little as two years ago, getting a bank to modify your loan was rare, and required you to be seriously behind in payments. Today, banks are very willing to help keep you in your home by modifying your payments. Workouts vary greatly depending on many variables, but the best ones we see lower your rate to around 3% for 5-years. Then the rates start adjusting back to where they originally were.

Unfortunately, we are seeing two problems emerge with modification. The first, is many people who got loan modifications fairly quickly fall behind again. While no one wants to lose a home, you must be realistic. Many times I speak with people where I calculate a payment based on ZERO percent, and they still tell me they can't make the payment. Modifying only delays the inevitable. Getting out completely and into a situation you can afford releases untold weight off your shoulders.

This brings me to another HUGE problem. Unlicensed loan modification companies have popped up everywhere offering to help you. These companies vary from legitimate low or no fee non-profits, to outright fraud. States across the country have files cease and desist orders, criminal charges, and lawsuits against man. We suggest that if a loan modification is right for you, that you consider working with your bank yourself, or contacting a city, county, or state non-profit homeownership center before paying any upfront or advanced fee to anyone, no matter what they promise.

REFINANCING YOUR EXISTING LOAN: Interest rates are currently hovering near historic lows and it is well worth thinking about getting something better if you qualify. The basic criteria is that if you can lower your rate and you'll be there long enough to at least break even on the closing costs, then it is a smart move.

Today unfortunately, we take many refinance applications, but don't actually close a lot of new loans because of a variety of reasons. The biggest is failing values. A customer of mine bought a home 3-years ago with 20% down. Today's appraised value would put him at 90% loan-to-value. While I can lower his rate 1%, I now have to give him mortgage insurance because he would be over 80%. The mortgage insurance cost completely wipes out the interest rate savings making his payment HIGHER than he is currently. (Wondering what your home is worth today, and what it will appraise for? get a FREE home valuation report)

New credit score requirement and tighter lending guidelines in general also combine to make many refinances harder to come by too.

So, should you be buying a home, modifying your existing loan, refinancing, or running away? It all depends, but I suggest we all stop living in fear, properly analyze our lives and personal situations, take our heads out of the sand, and make well educated decisions to put our lives in a better place.

SPECIAL UPDATE

Government officials have been under enormous pressure to help stabilize home prices and prevent foreclosures. At the same time, they don't want to appear to be using taxpayer money to bail out undeserving individuals and institutions. As Fed Chief Bernanke stated, the solution may involve a "full range of coordinated measures" aimed at different aspects of the problem.

The government has already put many programs in place, and others are under discussion. The Fed and the Treasury have used billions of dollars to provide financial institutions with capital to make loans. Last week, they instituted a program to buy MBS to push mortgage rates lower.

Yesterday, the Treasury announced that it is considering a plan which would offer below-market mortgage rates for some loans used to purchase homes. The program being discussed involves the Treasury investing in MBS guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac, which contain purchase money loans at a specified rate (4.5% was the initial proposal). The lower rates will not be available for refinancing loans. There has been no indication that these loans will have special underwriting or eligibility requirements.

Keep in mind, the timing and the final form of this latest program is not known. As we have seen recently, most notably with the $700 billion TARP rescue plan, government programs can change significantly before their implementation. The incentive to execute such a plan is  compelling, however. Lower mortgage rates make homes more affordable. As more people purchase homes, prices will stabilize more quickly and new home construction will pick up, giving the overall economy a much needed boost.

Stay tuned. This could get interesting!

BUSH ADMINISTRATION LAUNCHES "HOPE FOR HOMEOWNERS" PROGRAM TO HELP MORE STRUGGLING FAMILIES KEEP THEIR HOMES

WASHINGTON - The Bush Administration today unveiled additional mortgage assistance for homeowners at risk of foreclosure. The HOPE for Homeowners program will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD's Federal Housing Administration (FHA).

"For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford," said HUD Secretary Steve Preston. "FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners' ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them."

The HOPE for Homeowners program was authorized by the Economic and Housing Recovery Act of 2008. Since the President signed this vital legislation into law on July 30, 2008, the HOPE for Homeowners Board of Directors has worked diligently to develop and implement the program as directed by Congress. The Board was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage.

The HOPE for Homeowners program begins today and ends September 30, 2011. The program is available only to owner occupants and will offer 30-year fixed rate mortgages - so the borrower's last payment will be the same as the first payment. In many cases, to avoid what would be an even costlier foreclosure, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home.

Borrower Eligibility

Borrowers are encouraged to contact their lender to determine eligibility, but may be eligible if, among other factors:

• The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.
  
   
• Their existing mortgage was originated on or before January 1, 2008, and they have made at least six payments.
  
   
• They are not able to pay their existing mortgage without help.
  
   
• As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.
  
   
• They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).

The COMPLETE Home Buyers Guide to Financing Your Home  Understanding Your FICO Credit Score  Knowing and Understanding Your Credit  #1 Mistake People Make When Buying a Home

How the HOPE for Homeowners program works

"HOPE for Homeowners will add to HUD's existing efforts to make FHA refinancing available to homeowners who need it most," said FHA Commissioner Brian D. Montgomery. "One year ago, FHA expanded refinancing into its FHASecure program. Since that time, we have helped more than 360,000 families keep their homes by refinancing with FHA, and we will assist a total of 500,000 families by the end of this year."

The Board expects that the primary way homeowners will participate in the program is by working with their current lender. HOPE for Homeowners will serve as another loss mitigation tool available to distressed borrowers.

HOPE for Homeowners also includes the following provisions:

• The loan amount may not exceed a maximum of $550,440.
  
   
• The new mortgage will be no more than 90 percent of the new appraised value including any financed Upfront Mortgage Insurance Premium.
  
   
• The Upfront Mortgage Insurance Premium is 3 percent and the Annual Mortgage Insurance Premium is 1.5 percent.
  
   
• The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
  
   
• The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
  
   
• Existing subordinate lenders must release their outstanding mortgage liens.
  
   
• Standard FHA policy regarding closing costs applies, and they may be:
  • Financed into the new loan provided the value of the mortgage (including the Upfront Mortgage Insurance Premium) does not exceed 90 percent of the new appraised value of the home.
  • Paid from the borrowers' own assets.
  • Paid by the servicing lender or third party (e.g., federal, state, or local program).
  • Paid by the originating lender through premium pricing.
  
   
• The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
  
   
• The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

While our government is bailing out Wall Street, DPA and H.R. 6694 is looking out for Main Street.

The plan being negotiated by the Bush administration and Congressional leaders calls for the government to spend up to $700 billion to bailout Wall Street. Add in the $300 billion from the "Housing Bill" (H.R 3221) passed in July and this bailout is costing taxpayers $1 TRILLION!

The single largest part of this tragedy is that this $1 trillion is being spent bailout Wall Street, banks, institutional investors and foreign investors!

And while all this is going on in Washington, D.C., who's looking out for the American Taxpayer? Who's focusing on working class Americans?

The growing list of sponsors for H.R. 6694 are! As you know HUD has tried to paint a picture of DPA as part of the problem, and while yes, there have been a few issues, it really has helped. More and more people are realizing that DPA and H.R. 6694 is not the problem, rather, a part of the solution. It is a $150 billion annual boon to our economy that does not require taxpayer subsidy!

Main Street America needs H.R. 6694 as part of the solution to help working class American families become homeowners! Why should these families who are neither rich nor reckless be denied homeownership when it will cost taxpayers nothing?

H.R. 6694 Provides Downpayment Assistance with these benefits: Zero tax dollars are used to fund downpayment assistance (DPA) programs Real estate purchases stimulate the economy and generate tax revenue DPA programs help thousands of families each month realize the dream of homeownership Homes purchased with DPA drive wealth creation

The time is now. Please act. Support H.R. 6694!

Contact your Senators and House Representative and tell them H.R. 6694 should be included as part of the Wall Street bailout plan! Send a Letter in Support of H.R. 6694 and DPA.

Visit http://capwiz.com/nehemia/issues/alert/?alertid=11709431

FHA bans "BUY and BAIL" strategy

FHA just released new rules which specifically address loan transactions in which a borrower is purchasing a NEW primary residence WITHOUT selling their existing resident.

Commonly known as "BUY and BAIL", many people have been buying a new (usually cheaper) home then purposely letting their old home go into foreclosure. Many of these original homes had been For Sale without selling for a significant amount of time, and are usually worth LESS than what is owned.

To achieve this, many new applicants "claimed" their existing home was to become a rental property, then used fake "rental income" to qualify.

The conforming market also recently closed this loop hole by mandating new loan-to-value guidelines on homes being converted to rentals, proof of security deposits, significantly higher amounts of money in application bank accounts for reserves, and new rules as to what can and can't qualify for "renatl income."

The entire FHA Mortgee Letter text follows, but is also available at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-25ml.doc

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Mortgagee Letter 2008-25

Through this Mortgagee Letter, the Federal Housing Administration (FHA) takes steps to immediately respond to an unscrupulous practice arising in the housing mortgage market that poses a risk to FHA, FHA-approved lenders, and consequently to FHA’s ability to help new homeowners.

Recently, FHA and others in the mortgage industry have observed an increasing number of homeowners who have chosen to vacate their existing principal residence and purchase a new residence. This has been occurring as some homeowners, given the rising price of fuel, are relocating to homes nearer their employment, or are taking advantage of other home buying opportunities arising in the marketplace.

Due to FHA’s concern that some homebuyers in these transactions may attempt to provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage, FHA is instituting underwriting guidance designed to assure that the homebuyer can make payments on the full debt service of both mortgages. Consequently, beginning with case number assignments on or after the date of this Mortgagee Letter and until further notice, the underwriting analysis may not consider any rental income from the property being vacated except under circumstances described in this Mortgagee Letter. The exclusion of rental income from property being vacated is being instituted on a temporary basis while FHA further analyzes this situation to determine whether permanent measures may need to be taken. This will assure that a homeowner either has sufficient income to make both mortgage payments without any rental income or has an equity position not likely to result in defaulting on the mortgage on the property being vacated. In either case, this guidance is directed to preventing the practice known as “buy and bail” where the homebuyer purchases, for example, a more affordable dwelling with the intention to cease making payments on the previous mortgage. Although the property being vacated will not have a mortgage insured by FHA, surrounding properties may and, thus, FHA may be indirectly negatively affected should that property result in a foreclosure.

Exceptions:

Rental income on the property being vacated, reduced by the appropriate vacancy factor as determined by the jurisdictional FHA Homeownership Center (see http://www.hud.gov/offices/hsg/sfh/ref/sfh2-21u.cfm) may be considered in the underwriting analysis under the following circumstances:

· Relocations: The homebuyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance. A properly executed lease agreement (i.e., a lease signed by the homebuyer and the lessee) of at least one year’s duration after the loan is closed is required. FHA recommends that underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner.

· Sufficient Equity in Vacated Property: The homebuyer has a loan-to-value ratio of 75 percent or less, as determined by either a current (no more than six months old) residential appraisal or by comparing the unpaid principal balance to the original sales price of the property. The appraisal, in addition to using forms Fannie Mae1004/Freddie Mac 70, may be an exterior-only appraisal using form Fannie Mae/Freddie Mac 2055, and for condominium units, form Fannie Mae1075/Freddie Mac 466.

The guidance in this Mortgagee Letter applies solely to a principal residence being vacated in favor of another principal residence. This Mortgagee Letter is not applicable to existing rental properties disclosed on the loan application and confirmed by tax returns (Schedule E of form IRS 1040).

It is important to note that if the property being vacated had a mortgage insured by FHA, eligibility for a second FHA insured mortgage can only occur under the exemptions described in handbook HUD-4155.1 REV-5, paragraph 1-2.

If you have any questions regarding this Mortgagee Letter, call 1-800-CALLFHA.