Forclosure projections and Risk Based Pricing

New tools for assessing mortgage risk. With foreclosures projected to reach 2 million nationwide by the end of next year, bankers are rethinking how they set mortgage rates. Eventually, mortgage pricing may come to resemble pricing for, say, homeowners insurance, which takes into account dozens of factors. Lenders "want to be able to assess the risk, practically down to the biological level, that you won't pay your mortgage," says Keith Gumbinger, vice president of HSH Associates, which tracks the home-lending market.

Housing data: no secrets left. With more innovative real estate Web sites popping up, everyone now knows how much everyone else's house is worth, and consumers will continue to have unprecedented access to housing information that was once found only in multiple listing services. Source: Money

New Trends in Real Estate

New trends will reshape tastes in homes and transform how you buy and sell, experts say. So what will the housing market of the future look like? Money magazine interviewed developers, architects, lenders, and more, to paint the following picture--Smaller houses. In a February survey of potential home buyers by the National Association of Home Builders, 60 percent said they would rather have a smaller house with more amenities than vice versa. "In the past, people would say 'Give me space and I'll add the features later,' " says Gopal Ahluwalia, the NAHB's vice president of research. Newly built houses will have layouts that can "live bigger" than their square footage would suggest, with rooms that can do double duty, experts say.

The Atvantages of FHA Loans - 100% Financing

The Advantages of FHA Loans

In many regions of the U.S., FHA loans have not been utilized for years, so a lot of real estate agents and mortgage originators aren't familiar with this great resource. The following are a just a few of the recent changes that have made FHA loans a more attractive option again for some
consumers looking to buy a new home or refinance an existing one:

1) Congress passed the Stimulus Act of 2008. During the recent housing boom, home values surpassed FHA loan limits in many regions of the U.S. The recent enactment of this important legislation, however, increased FHA loan limits up to $729,500 in many high-cost regions of the U.S. through the end of the year. FHA loan limits vary by county, so give us a call for loan limits in your area.

2) The FHA changed its appraisal and fee negotiating guidelines. In the past, many sellers steered clear of FHA loans because the appraisals were too strict and certain fees were non-negotiable. The FHA has greatly loosened these guidelines to make it easier for both buyers and sellers.

3) FHA loans are much cheaper now. Because FHA loans are federally insured, they tend to trade at a higher premium in the secondary market.
This means lenders can often charge a lower rate.

Other FHA Benefits

• FHA loans are not credit-score driven. Borrowers can have a lower score than other products and still qualify for a good rate.

• FHA loans require as little as 3% down.

FHA loans allow down-payment assistance programs. This allows the seller to cover the buyer's down payment and closing costs.

This means borrowers, especially first-time buyers, or move-up buyers with limited funds, have a real opportunity of getting into a home with little or no cash at closing.

For sellers, this means you can offer concessions that make marketing your home without having to lower the price of your home again.

• FHA loans allow
a) Sellers to finance all of the buyer's costs to close;
b) Homeowners to take cash out up to 95% of the home's value;
and
c) Homeowners to consolidate a first and second loan up to 97% of the home's value.


If you or someone you know is thinking about buying or refinancing a home, give us a call. We'll see if an FHA loan is right for your financial goals and needs.

Source: The Loan Tool Box

Risk Based Pricing Impact

The Federal Reserve Board and the Federal Trade Commission have announced proposed regulations that generally would require a creditor to provide a consumer with a risk-based pricing notice when, based in whole or in part on the consumer's credit report, the creditor offers or provides credit to the consumer on terms less favorable than the terms it offers or provides to other consumers. Risk-based pricing refers to the practice of using a consumer's credit report, which reflects his or her risk of nonpayment, in setting or adjusting the price and other terms of credit offered or extended to a particular consumer. Many creditors offer more favorable terms to consumers with better credit histories. The proposed rules would apply, with certain exceptions, to all creditors that engage in risk-based pricing. Under these rules, a risk-based pricing notice would generally be provided to the consumer after the terms of credit have been set, but before the consumer becomes contractually obligated on the credit transaction. The proposal provides a number of different approaches that creditors may use to identify the consumers to whom they must provide risk-based pricing notices. In addition, the proposed rule includes certain exceptions to the notice requirement. The most significant of the exceptions permits creditors, in lieu of providing a risk-based pricing notice to those consumers who receive less favorable terms, to provide all of their consumers with their credit scores and explanatory information.


Source: Mortgage Bankers Association of America

CalHFA Changes and Other Options for 100% Financing

Here are the changes from CalHFA

Hi All,

Be careful on CalHFA right now!!

*Note the changes below.

1) Seller credit max is 3% - even if you are doing an FHA loan
2) Nehemiah can no longer be used with Cal HFA products
3) 45.00% max DTI on manual underwriting and 55.00% on Automated
approvals
4) 3 years from BK discharge - regardless of what kind of first
mortgage you have
5) Mid low FICO of all borrowers must be 620 for 95% LTV or less or 680
for 95.01% LTV or more (Note this is LTV, not CLTV)

Please make sure you are relaying this info to your clients...

Another option for 100% financing is FHA loans with Nehemiah gifts through seller contributions (up to 6%)!

For Further information please contact our chief FHA and Nehemiah Specialist Joe Littell at joe.littell@partnersnet.com for further information.

Tell EVERYONE about the NEW FHA LOAN LIMITS!!

I have some information for you and other real estate professionals that is a breath of fresh air.

The new loan limits have come out for FHA and since the real estate industry considers FHA as the new Alt-A loan program this means that more people will qualify to both purchase new homes and refinance out of bad loans!

Here are the new FHA loan limits! They are significantly higher then expected! Let me know if you need any further information since this program is the loan of the future for non-prime borrowers. These FHA loan limits can go into effect as early as next Thursday!

Three things to keep in mind are that:

1. FHA does not require reserves!

2. Although FHA is subject to risk based pricing, FHA is not fico driven!

3. FHA has the option of 30 and 15 year loans (fully amortized no interest only)!

4. The FHA secure program which is only available until Dec. 31 2008 can refinance people with negative equity. (Call for details)

The memo is below:

NEW FHA LOAN LIMITS BY COUNTY

At a speech today in Orange County, HUD Secretary Jackson announced the new limits for California. Attached are the limits by county. They appear to be about as high as we could have expected. The limits for the rest of the country should be published tomorrow. We understand that FHA will require second appraisals on loans over a certain limit (possibly $417,000) if the following conditions exist: 1) LTV is above 95%, 2) the appraiser has designated the property in a declining market and there is data that corroborates that fact. Mountain West Financial is pleased to announce we will be underwriting and approving loans at the new limits and will advise you as soon as we are in a position to lock loans at these new limits.

California County Limits

Obs	prop_addr_st	county_nm	med_price	FHA_1unit
185	CA	Alameda County	995000	729750
186	CA	Alpine County	438000	547500
187	CA	Amador County	355000	443750
188	CA	Butte County	320000	400000
189	CA	Calaveras County	370000	462500
190	CA	Colusa County	318000	397500
191	CA	Contra Costa County	995000	729750
192	CA	Del Norte County	249000	311250
193	CA	El Dorado County	464000	580000
194	CA	Fresno County	305000	381250
195	CA	Glenn County	230000	287500
196	CA	Humboldt County	315000	393750
197	CA	Imperial County	260000	325000
198	CA	Inyo County	350000	437500
199	CA	Kern County	295000	368750
200	CA	Kings County	260000	325000
201	CA	Lake County	321000	401250
202	CA	Lassen County	200000	271050
203	CA	Los Angeles County	710000	729750
204	CA	Madera County	340000	425000
205	CA	Marin County	995000	729750
206	CA	Mariposa County	330000	412500
207	CA	Mendocino County	410000	512500
208	CA	Merced County	378000	472500
209	CA	Modoc County	125000	271050
210	CA	Mono County	370000	462500
211	CA	Monterey County	599000	729750
212	CA	Napa County	615000	729750
213	CA	Nevada County	450000	562500
214	CA	Orange County	710000	729750
215	CA	Placer County	464000	580000
216	CA	Plumas County	328000	410000
217	CA	Riverside County	400000	500000
218	CA	Sacramento County	464000	580000
219	CA	San Benito County	790000	729750
220	CA	San Bernardino County	400000	500000
221	CA	San Diego County	558000	697500
222	CA	San Francisco County	995000	729750
223	CA	San Joaquin County	391000	488750
224	CA	San Luis Obispo County	550000	687500
225	CA	San Mateo County	995000	729750
226	CA	Santa Barbara County	615000	729750
227	CA	Santa Clara County	790000	729750
228	CA	Santa Cruz County	719000	729750
229	CA	Shasta County	339000	423750
230	CA	Sierra County	228000	285000
231	CA	Siskiyou County	235000	293750
232	CA	Solano County	446000	557500
233	CA	Sonoma County	530000	662500
234	CA	Stanislaus County	339000	423750
235	CA	Sutter County	340000	425000
236	CA	Tehama County	250000	312500
237	CA	Trinity County	200000	271050
238	CA	Tulare County	260000	325000
239	CA	Tuolumne County	350000	437500
240	CA	Ventura County	599000	729750
241	CA	Yolo County	464000	580000
242	CA	Yuba County	340000	425000

Final Thought

"You can't build a reputation on what you're going to do."

~ Henry Ford

Since we are either proactive or reactive, I urge you to reach out to EVERYONE you can and connect with them! Too many people are paralyzed by the bad media and the fear that grips the general populace.

By letting them know that “money is on sale”, because interest rates are so low and inventory is so high, we are all experiencing the epitome of a home buyers market.

The favor lies with the buyers and the sellers that know how to capitalize on the oppurtunities available for buyers...ie the 3-2-1 buydown, ect.

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