When Higher Rates Are Good News.

When are higher rates good news? The fact that rates on fixed mortgages have moved up in the past few weeks may actually be. Why? Because the rates on Treasuries have moved up further. This means that the spreads between mortgages and other rates are decreasing and could mean that the secondary markets are gaining confidence in mortgages again. Remember, part of the reason that rates on many mortgages have increased in spite of lower rates everywhere else is that the default rates on mortgages were so high. This accounted for the fact that adjustable rate mortgages and jumbo mortgages rose dramatically over the past year despite generally lower rates. Source: Origination Pro - Dave Hershman

Over 1 Million Forclosed Homes!

More than one million homes are now in foreclosure, the highest rate ever recorded, according to a trade group which warned Thursday that the crisis will continue to worsen. The Mortgage Bankers Association's first quarter report showed that a record 2.5% of all home loans being serviced by its members are now in foreclosure, which works out to about 1.1 million homes. That's up from the 2% of loans, or about 938,000 homes, that were in foreclosure at the end of 2007. The report also showed that 448,000 homes, or about 1% of loans being serviced, began the foreclosure process during the first quarter. That's up from about 382,000 homes, or 0.83%, that entered foreclosure in the last three months of 2007. The number of homeowners behind on their mortgage payments also hit a record high. Nearly 3 million home loans are now at least one payment past due, while about 737,000 are at least three months past due but not yet in foreclos ure. This marks the sixth straight quarter in which a record percentage of loans went into foreclosure. The trend has led to a widespread decline in home prices, as well as huge losses for banks and other financial firms that issued or invested in the loans. Source: CNN/Money

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.

Short Sale and Forclosure News

Banks say they want to help troubled homeowners, but they are delaying deals that could save everyone - including the lenders themselves - a lot of time and money. Lenders are taking much longer than necessary to approve short sales, according to Duane LeGate, of House Buyers Network, a short sale specialist. In a short sale, a homeowner who cannot keep up with their loan asks the lender to take a dollar amount less than what is owed on a home's mortgage, and forgive the remainder of the unpaid debt. So if a borrower has a mortgage balance of $100,000 and finds a buyer who will pay $95,000 for the house, the lender agrees to accept that $95,000 and close out the loan. "There was a much greater chance of success with these in the past," said LeGate Ideally in a short sale, everyone wins. Borrowers avoid the ugly foreclosure process that destroys their credit, while lenders recoup more of their costs than they would by s pending the time and money it takes to kick an owner out and resell the property. Lenders typically lose about 19% of a mortgage's value in a short sale, according to Clayton Holdings, a Conn.-based, provider of loan analytics, while they lose an average of 40% on loans that go into foreclosure. Coldwell Banker CEO Jim Gillespie agrees that short sales are taking too long to complete. And he speaks from firsthand experience; a short-sale offer he made on a house in Marin County, Calif. in late fall didn't win approval until April. But most buyers can't, or won't, wait that long."That's been our biggest challenge - keeping the buyers interested long enough as we wait and wait for an answer," said Jeff Morrell, a Colorado Springs real estate agent who specializes in short sales. Source: CNN/Money

Fannie Mae Removal of 5% Market Decline!!!!!!!

Following a similar decision by Fannie Mae, Freddie Mac has eliminated its controversial policy of requiring borrowers to put up larger downpayments in markets where home prices are declining. "Beginning June 1, 2008, we will allow maximum financing up to 95% LTV for most Freddie Mac mortgages in all markets," Freddie says in a May 16 e-mail message to its approved lenders. Under its declining-markets policy, the maximum amount of financing was reduced by 5% in markets where lenders determined that house prices are falling. On May 2, Freddie issued a bulletin to its lenders revising the policy so that the loan-to-value ratio of 95% became the floor for most loan products. "The practical effect [of the May 16 change] is that lenders no longer have to make that determination about a declining market," a Freddie spokesman said. As previously reported, Fannie is scrapping its declining-markets policy starting Jun e 1. Source: National Mortgage News