HARP 2.0 Should Help Millions Refinance Their Mortgage

The Home Affordable Refinance Program (HARP) was designed to help homeowners, whose home values have fallen, to refinance their mortgage to take advantage of the historically low rates we have been experiencing lately. The changes to the HARP program should sidestep a lot of the reasons lenders were unwilling or unable to help more homeowners.

Under HARP, homeowners who had little to no equity, or were upside down on their properties, could refinance their mortgage at today’s low rates. If a borrower did not have mortgage insurance originally, it would not be required on the new loan even if the new loan to value ratio (LTV) would normally require it. And, if a borrower did have mortgage insurance, the new mortgage insurance requirement would be at the same level of coverage they had before. And, the borrower could refinance even if their first mortgage was up to 125% of the value of the home.

With the changes to HARP that 125% limitation is lifted – allowing a borrower to refinance their mortgage regardless of how much negative equity they have in the property. This will open the program to more borrowers excluded under the original HARP.

But, I’ve read that many lenders did not participate in the original HARP – why will this be any different?

Under HARP, many lenders would only refinance borrowers up to a 95% LTV. Some would go to 105% LTV but very few would go to the maximum of 125% LTV. Why? Because, generally, when a mortgage is refinanced by a lender, the representations and warranties attached to the original loan and property are carried over to the new lender. So, the investors (Fannie Mae and Freddie Mac) can force the lender to buy back that mortgage due to defects overlooked by the previous lender. Many lenders were not willing to take that risk, especially on a refinance with no or negative equity. Therefore, the few lenders that were willing to take the risk of a 125% LTV refinance only took that risk on loans that they were already servicing and therefore already exposed to the buyback risk.

Under the changes to HARP, Fannie Mae and Freddie Mac will waive the reps and warranties for refinancing mortgage that are already owned by Fannie Mae and Freddie Mac and were originated before June 1, 2009. Even though this may increase the risk to Fannie/Freddie, the increase in risk should be negligible. Experts say that most defects that trigger reps and warranties occur in the first couple years of the mortgage. Also, in order to qualify for the program, borrower must be current on the loan, have no late payments in the past 6 months, and at most one late payment in the past twelve months. These borrowers pose less of a default risk than those with recent late payments on their mortgage.

Not all of the guidelines and details have been completed. Fannie Mae and Freddie Mac are going to have the new HARP guidelines finalized b November 15, 2011 and HARP should be live by December 1, 2100.

Stay tuned to Barkerblog.com for more information on HARP 2.0 as it becomes available.

If you think you can benefit from these changes, contact me ASAP so we can get your application started – this is sure to create a lot of demand for refinancing and ledners can easily get overloaded.

I can be reached at BarkerLoans@gmail.com or 708.473.7688. Or, if you want to apply online, plese go to www.BarkerLoans.com and complete the full application. There is no cost or obligation to apply.

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Why can’t I get the lowest possible mortgage rate?

It’s frustrating! You read the headlines, “Mortgage rates lowest in 60 years!” Then, you call the lender and the rate quoted is higher than what you‘ve seen online. You wonder, “What’s going on here?”

There are a lot of reasons that the rates you are being quoted may not be as low as the rates you see advertised. Here are a few of them:

1) They aren’t real. A lot of internet rates are not honest quotes. And, those that are may already be expired or may have have conditions on them that only a tiny fraction of borrowers can meet.

2) You have to pay discount points. Fannie Mae and Freddie Mac Weekly rate surveys show rates from the previous week and will likely require you to pay discount points. On a recent Freddie Mac rate survey, the rate on a 30 year fixed rate mortgage was 4.10%. But, further in the article it stated that the 30 year fixed rate mortgage carried an average of 0.8% of a discount point. A discount of 1.0% (1 Point) can be a 0.125% - 0.500% difference on the interest rate.

3) Your credit score isn’t high enough. Fannie Mae & Freddie Mac have Loan Level Pricing Adjustments (Click here for my blog article on LLPAs). If your interest rate Is below 740 and your Loan to Value Ratio (LTV) is greater than 80% there will be adjustments to your interest rate. For example, if your middle credit score is 700 and your LTV is 75.01% - 80.00%, there will be a loan level pricing adjustment of 0.75%. This is an additional fee (points) that will have to be paid with your mortgage. Since most people do not pay points on their mortgage, this will result in a higher interest rate.

4) Your loan isn’t large enough. The rates you see listed are often for very large loan amounts. Larger loan amounts provide more revenue but don’t cost more to originate than smaller loans, so the lenders can make the same or more profit, even at a lower interest rate.

5) You are in the wrong area. Some lenders have different rates for different geographic areas of the country. This may be due to higher default rates in certain areas or higher costs to originate loans in those areas.

6) You have more than one loan. If you have subordinate financing on your transaction (either purchase or refinance) there may be LLPAs as a result. For example, if you are buying a house with an 80/10/10 (80% LTV on the first mortgage, 10% on the second mortgage and a 10% down payment) there is an LLPA of 1.0% on this transaction. This could result in a rate increase of up to 0.5%. People using an 80/10/10 are trying to avoid mortgage insurance on the first mortgage so they may still be saving money. A lot of people who want to refinance their first mortgage, and already have a second mortgage, are noticing significantly higher than those they read about. Many homeowners took out large second mortgages when their home values were at their peak. Now, they either have little to no equity in their property or they may even be upside down on their property (they owe more than the property is worth). If these borrower are able to refinance, their rates wills urely be higher that the best possible rates.

7) Wrong property type. If you own or are purchasing anything other than a single-family, detached residence your rates will be higher. Condos, townhomes and 2-4 unit buildings may have add-ons to the rates or points.

8) Refi versus purchase. Also, the best possible rates are usually for purchase transactions. If you are refinancing, or taking cash out on your refinance, you will see higher rates.

9) You aren’t going to live there. Last, the occupancy of the property will affect the interest rate. If the property is a second home or investment property your rates will be higher.

This list is by no means an all-inclusive list of the reasons you may not be able to get the rock-bottom, lowest-possible rates you’ve been reading about, but it gives you some ideas. Make sure you are working with a reputable, experienced lender who will give you knowledgeable and honest answers to the rates you are being quoted.

And you can always reach out to me at BarkerLoans@gmail.com or by calling 708.473.7688 to answer any questions you have or to help you with your financing needs. There’s never an obligation, and always free information!

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Who could use some extra money for the holiday season?

Did you realize that Christmas is less than 60 days away?
Hanukkah begins in only 55 days!
Are you ready?
Could you use some extra money to help with the holiday expenses?
What if you would skip your December mortgage payment?

If you were to refinance your mortgage and close in November the first payment on your new mortgage would not be due until January 1, 2012! And, your mortgage payment would be lower to start the New Year. How nice would it be to have the amount you pay for your mortgage available to help with the holiday expenses?

Call me today to see how much money you could save by refinancing and get the application started to make sure we can close your loan in November.

I can be reached at 708.473.7688 or BarkerLoans@gmail.com. To apply online go to www.BarkerLoans.com.

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The Fed Does the “Twist”

Mortgage rates could fall even lower!

No, we’re not talking about the Chubby Checker hit from 1960. We’re talking about the Federal Reserve’s latest attempt to keep long-term interest rates low in order to boost the sagging economy. Operation Twist, as some have nicknamed it, is a plan by the Fed to sell short-term treasuries (3-year and shorter) and purchase long-term treasuries (6-year and longer) in an effort to keep the long-term interest rates low. The Fed will also use the principal payments from its portfolio of mortgage-backed securities to purchase longer-term treasuries.

The Fed has committed to purchase $400 Billion in longer-term treasuries over the next year. By buying these treasuries the price will increase thereby reducing the rates on the securities. Fixed interest loans and mortgage should see a slight improvement in rates due to this program.

One of the targets of this program is the housing market.
The Fed hopes that by keeping rates low it will spur some home buying. However, I think the impact on the housing market will be limited at best. With mortgage rates already at historic lows, prospective homebuyers are not putting off a potential home purchase because rates are too high. They are putting off a purchase due to lack of confidence in the economy, fear of future job loss, current home they are unable to sell, and property values that continue to fall – none of which have anything to do with mortgage rates.

Current homeowners looking to refinance may benefit, though. Even though interest rates have already been historically low, many people may still be able to save money as rates decrease. Hopefully, this savings will help consumers pump more money back into the economy and help prevent a second (or double-dip) recession.

The impact on the overall economy won’t be known for months. But, if you are a homeowner looking to save some money, give me a call today to see if refinancing is right for you. I can be contacted at 708-473-7688 or BarkerLoans@gmail.com.

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Property need some TLC? Try an FHA Streamlined 203K

FHA Streamlined 203(k) Loan

Perfect for purchasing a foreclosure, short sale, or fixer-upper

With the increase in the amount of foreclosures, short-sales, and fixer-uppers on the market, many people are looking for ways to purchase a home that need some work without paying for all of the costs out-of-pocket. FHA offers a streamlined version of the traditional 203(k) rehab loan. The Streamlined 203(k) loan offers that homebuyer the ability to finance up to $35,000 of improvements to the property into the mortgage.

The Streamlined 203(k)is designed for non-structural repairs to the property. You cannot move load bearing walls or add an addition to the property with the Streamlined 203(k) loan. However, there are a lot of repairs that can be covered:

• Repair/ replace/upgrade roofs, gutters/downspouts, HVAC systems, plumbing systems, electrical systems, flooring.
• Remodel kitchens, baths, etc.
• Painting – interior and exterior
• Weatherization of property – doors, windows, insulation, etc.
• Finish/re-finish basements or attics
• Handicap-accessible improvements
• New appliances
• New siding
• Basement/crawlspace waterproofing
• Lead-based paint stabilization or abatement
• Repair/replace/add exterior decks, porches and patios

Following are the limits to the extent of work that can be performed with a Streamlined 203(k) loan:

• Major rehab/remodeling that may require the addition or relocation of a load-bearing wall.
• Any new construction including adding an addition to the property
• Repairing any structural damage to the property
• Any work that cannot be started within 30 days of closing or completed within 6 months of closing
• Any work that requires detailed plans, drawings or architectural exhibits
• Any work that would require the homeowner to vacate the property for more than 30 days.

In addition to the above, the Streamlined 203(k) loan also does not require the use of a consultant nor the use of a general contractor to complete the work. And, if the amount of work to be performed on the property is less than $15,000, the mortgagee (lender) may not require an inspection of the completed work. The Streamlined 203(k) can also be used on a refinance to remodel/rehab a property you are currently living in. However, it can only be used on owner-occupied properties.

If you are thinking of purchasing a property that will need some work after closing, please give me a call so we can go over the details of the requirements of this loan. I can be reached at 708-473-7688 or BarkerLoans@gmail.com

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Down Payment Assistance Is Not Dead!

Down Payment Assistance Is Not Dead!

Many first-time homebuyers, who would otherwise qualify for a mortgage, lack the funds to cover the down payment and closing costs necessary to purchase a home. In fact, this is the largest barrier to becoming a homeowner.

Some people are fortunate enough to be able to get a gift for the down payment from a parent or other relative. But, with the recent economic down turn fewer people have money to give. And, with the seller-assisted down payment assistance programs being banned a couple years ago many first-time homebuyers have had to sit on the sidelines and wait to afford a new home.

Down Payment Assistance is Alive and Well!
At Envoy Mortgage, we offer a program that will assist these first-time home buyers purchase their new home -- and maybe help the housing market turn around. Here are some of the features of the program:
• Up to $6,000 in down payment and closing cost assistance
• Up to 100% financing available
• Fixed rate with terms up to 30 years
• Available with FHA or conventional loan programs
• Reduced mortgage insurance for conventional loans
• Available to first time home buyers, veterans or spouses of veterans (In certain, targeted areas, these restrictions do not apply – contact me for more information)
• Below-market interest rates
• Up to 45% debt-to-income ratios

With this program, we have been able to help first-time homebuyers make the leap into homeownership. Call me today for more information on this program.

Yet another reason to choose me and Envoy Mortgage for all your financing needs!

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Fannie Mae HomePath® Buyer Incentive Program

Fannie Mae has added a buyer incentive to their HomePath® mortgage program (For more information on the Home Path Program go to Fannie Mae Home Path Mortgage ). Fannie Mae is currently offering buyers up to 3.5% in closing cost tassistance through June 30, 2011.

The HomePath® property buyer must meet the following qualifications to be eligible:

• Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer in order to be eligible.
• The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
• The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
• Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
• Buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
• If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Note: Fannie Mae can give no assurance on the time required to close, but initial offers submitted after May 15, 2011 are particularly questionable for closing by the incentive deadline of June 30, 2011.

Call me today to find eligible properties in your area and to start the mortgage approval process. I can be reached at 708.473.7688 or BarkerLoans@gmail.com. To apply online please visit www.BarkerLoans.com.

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Fannie Mae HomePath® Mortgage

The HomePath® program is a special financing program to provide financing for purchasers of Fannie Mae Real Estate Owned (REO) properties (as a result of foreclosure or other similar action such as deed-in-lieu of foreclosure) that Fannie Mae has deemed eligible for HomePath® Mortgage financing.

FEATURES AND BENEFITS:
• Low down payment (Up to 97% LTV available)
• You may qualify even if your credit is less than perfect
• Available for primary residences, second homes and investment properties
• Down payment can be funded as a gift, a grant, or a loan from a nonprofit organization, state or local government employer
• No appraisal required
• No mortgage insurance required

FLEXIBLE TERMS:
• 15- and 30-year fixed rate
• Adjustable options available

ELIGIBLE PROPERTY TYPES**:
Single Family Properties Only
Planned unit developments (PUDs)
Modular homes
**Geographic and unit restrictions apply. The property must be designated on HomePath.com as eligible for HomePath financing. Programs available only to qualified borrowers. Programs subject to change without notice. Underwriting terms and conditions apply. Some resitrcitions may apply. HomePath is a registered trademark of Fannie Mae. 0510


Call me today to find eligible properties in your area and to start the mortgage approval process. I can be reached at 708.473.7688 or BarkerLoans@gmail.com. To apply online please visit www.BarkerLoans.com.

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FHA Announces Change to Mortgage Insurance

In a move to bolster the Mutual Mortgage Insurance Fund (MMI), FHA has announced an increase to the annual mortgage insurance premium paid by borrowers with FHA-insured mortgages. While the Up-front Mortgage Insurance Premium will remain unchanged at 1.0%, the annual Mortgage Insurance Premium will increase from 1.0% to 1.25%. The increase will amount to a monthly payment increase of $20.84 for a $100,000 mortgage and an increase of $41.66 for a $200,000 mortgage.

At the end of 2010, the MMI had reserves of $3.6 Billion – well below the minimum requirement. The increases are expected to bring an additional $3 Billion into the MMI annually, based upon the current projections.

"After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA's capital reserves and help private capital return to the housing market," says FHA Commissioner David H. Stevens. "This quarter point increase in the annual MIP is a responsible step towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost-effective mortgage insurance option for borrowers with lower incomes and lower down payments."

The changes to the annual mortgage insurance premium will take effect with all loans insured after April 18, 2011.

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Fannie Mae Announces Changes to LLPAs

What is an LLPA?

LLPA stands for Loan Level Pricing Adjustment. An LLPA is an additional fee on top of any points and closing costs paid for a mortgage based upon the Loan to Value Ratio (LTV) and the borrowers’ credit score. So, the higher the LTV and lower the credit score the more you will have to pay for a mortgage. This can take the form of additional points and/or higher rates. LLPAs are risk-based adjustments to the cost of a mortgage (e.g. rates and points).

Effective with loan locked on or after January 18, 2011, loan level price adjustments (LLPAs) will change as outlined below. This is in response to recent Fannie Mae changes.

Changes have been made to:
• LLPAs by Credit Score/LTV
• LLPAs for Subordinate Financing
• LLPAs remain the same for DU Refi Plus



For the first time, the LLPAs for some LTV/Credit score combinations are actually lower. This is in response to higher quality loans being delivered to Fannie Mae and Freddie Mac, the Government Sponsored Entities (GSEs) that own most conforming mortgages in the country.

For information on LLPAs for programs or property types not listed here, please contact me at BarkerLoans@gmail.com or 708-473-7688.

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Why Do I Have 3 Different Credit Scores?

I get this question from customers all the time. Mortgage lenders typically pull credit reports from the 3 main credit repositories – Transunion, Equifax, and Experian. All three of these repositories generate a credit score, which is a numerical representation of your credit history. While the exact formula for computing these scores is a trade secret, we know that your credit score is affected by your payment history, amount of credit available, amount of credit used, and any collections and/or judgments against you.

But why wouldn’t they all have the same score for the same borrower? There are many reasons the scores may differ, but the main ones are:

1. Not all creditors and lenders report to all 3 credit repositories. So, the three repositories do not all have exactly the same information



2. Creditors report to the repositories at different times. Your balance with ABC credit card may be different at the 3 repositories because one may not reflect the last payment or purchase you made on your account and another may.



3. There are several different scoring models that are used. In fact, each repository uses different scoring models depending on the purpose of the score or the requirements of the creditor/lender. So, different models will analyze your credit data differently and give you a different score.

This is why most mortgage lenders pull credit reports from all 3 repositories and use the middle score. By using the middle score, lenders are attempting to get as accurate a credit profile as they can for their customers.

What can I do to improve my credit score?
First, and most importantly, use credit wisely. Do not over extend yourself with credit and always make your payments on time.

Second, the amount of credit you use should be as small a percentage of your available credit as possible. For example, if you have $10,000 of available credit, your score will be higher is you are only using $500 of that available credit than if you are using $7,000 of it.

Third, make sure you know what is on your credit report. The Fair and Accurate Credit Transaction Act of 2003 (FACTA) allows a consumer to request a copy of their credit report, free of charge, from all 3 repositories. To learn how to obtain your free credit report, and for other reasons to monitor your credit, read my blog article, FREE Credit Reports.

For more information or help with your credit, please contact me at BarkerLoans@gmail.com or 708.473.7688.

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