Mortgage Lender Atlanta » Fannie Mae

Fannie Mae’s ‘First Look’ Initiative

Jim Duffy — Mon, 30 Nov 2009 16:40:48 +0000

Fannie Mae announced that all of it’s foreclosed homes that are being put on the market are only available to owner occupant buyers for the first 15 days that they are on the market, in what it is calling the ‘First Look Initiative‘.

The idea behind this is to help stabilize hard-hit areas with more owner occupied buyers moving into the neighborhoods, as opposed to investors who will then rent the properties to tenants.

And, buyers who use public funds to cover the down payment, such as Georgia Dream funds, will be given priority in making an offer on the property, and will be given 45 days to close on the property.

This is very similar to the way HUD has for years treated their foreclosed homes. Owner Occupant buyers are given the first opportunity to put an offer on the home, and later if no offers come in, then the bidding is opened to investors. This could be some good news for some metro Atlanta neighborhoods; but will slow investors down even more.

Debt Consolidation Refinance Getting (Even More) Difficult

Jim Duffy — Mon, 16 Mar 2009 01:15:43 +0000

A lot of people used to use their homes as ATM machines, cashing out every so often to consolidate the debt that they used to finance their lifestyles – which demanded more money than their incomes provided.

Those days, thankfully, are over. Yet, I am meeting a lot of people around Atlanta who, for whatever reason, have credit card and other debt that is holding them back from getting ahead. They want to move forward and start saving, but the minimum payments due are not allowing them. So, they look to consolidate that consumer debt into a new, low interest mortgage to help the household cash-flow.

Deadline: March 31

Conforming loans have been more and more difficult to do high Loan-to-Value debt consolidation loans. First, because the days of adding a Home Equity Line of Credit (HELOC) were over. Then, because Fannie Mae and Freddie Mac cut back debt consolidation mortgage loans to 85% of the appraised value of the property. Then, because Mortgage Insurance Companies (read: PMI) refused to insure those loans in markets they considered “declining markets”.

So, for the average homeowner around Atlanta, the only option for a debt consolidation refinance was and FHA Mortgage Loan. FHA would go to 95% of the appraised value of the home in a cash-out refinance. But even FHA got tougher. If you were to exceed 85% of your property’s value, then you would now need two appraisals.

And now, things are getting even more difficult. For mortgage applications taken on or after April 1, 2009, the max cash-out refinance for even FHA mortgages will be limited to 85% of the home’s value – and then only if you have owned the home for 12+ months.

So, if you have been considering a cash-out refinance, and you will need a high loan-to-value, act this week to make sure that we can do it for you. Call me if you have been considering an FHA debt consolidation refinance, and your home is in Georgia.

Considering A Debt Consolidation Loan

Jim Duffy — Thu, 26 Feb 2009 15:11:44 +0000

With the economic squeeze the country is in, a lot of us are feeling the effects, and a lot of people around Atlanta – okay, around the country – have had to rely on their credit cards for everyday expenses.

And, we’ve all done it. ”Well, just this time, because things are tight, and I am sure I will be able to pay off this balance next month…”

We wake up one day six months later with a large credit card balance hanging over our heads – and a news cycle that constantly reports that the President or some economist is stating how bleak the economic future could be, the deficit is at an all time high, and wondering if super inflation is just around the corner. Then it sets in: heartburn.

A quick solution

Well, it used to be commonplace, and perhaps too much so, to roll everything into a new, low-rate mortgage. That said, if you find yourself in that position and have some equity in your home, a debt consolidation refinance could be a good option.

monthy cash flow savings

The above chart shows a real example of a loan I closed for a client just recently. I will explain each line, briefly.

The top number represents their prior mortgage payment + minimum credit card payments for the cards that we rolled into the new loan.
The Second line is the new mortgage payment, with the credit card balances rolled in.
Line 3 is the monthly cash-flow savings from month 1.
Then come the closing costs to close this loan for the client.
And the last line represents the number of months to break even.

If you are considering a debt consolidation loan, I cannot promise that you will save this much; but I will do the same comparison chart for you, and you can see the numbers before commiting.

Act Quickly, Cash-Out Rates are Rising

The reason for this post is that the ‘adjustments’ or ‘discount points’ that Fannie Mae and Freddie Mac charge for cash-out or debt consolidation loans will rise on April 1, 2009. So, if you want to use conventional financing to do the debt consolidation, then you want to act quickly.

FHA will still go to 95% of your home’s value on a cash-out refinance, even after April 1; and with not adjustments to rate. However, if you do a debt consolidation loan that is more than 85% of your home’s value, then you will now need two appraisals. Still a good option, but things are constricting further.

The Fallacy of a 4% 30 Year Fixed Rate

Jim Duffy — Thu, 12 Feb 2009 19:55:24 +0000

I have heard the story that the Obama administration wants to bring 30 year fixed mortgage rates down to 4%. But I have not heard how they will do it.

The only way they really have of lowering rates is by buying Mortgage Backed Securities (MBS). But the Fed is already buying MBS, and they just increased the amount earmarked to buy them from $600B to $1Trillion. So, the only other way that I can see to get to 4% is for the government to set aside a big chunk of money, outside of Fannie Mae or Freddie Mac, and loan directly from that.

Problem is, they would not be able to sell the notes on the secondary market except at a loss, because the market is currently offering 4.75%-5.5% rates. So the government would have to set up a huge servicing platform for those notes.

And I am sure that would run smoothly.

The Fed May Have Another Trick Up It’s Sleeve

Jim Duffy — Wed, 28 Jan 2009 14:12:34 +0000

The Meeting of the Federal Reserver Board will adjourn at 2:15pm today, and as is customary, Fed officials will speak. Normally, we have waited to see if the Fed will lower (or raise) interest rates, and both stock and bond investors respond accordingly. They cannot do that today, because the Fed Funds rates sits at .25%.

So, what can they do that will have any effect? Plenty. And from this article form Yahoo Finance page, it appears the Fed may begin to buy up other consumer debt securties, such as car notes, student loans and credit card debt-backed securities. Just like they are buying up Mortgage Backed Securities, which is what is causing mortgage rates to remain as low as they have. Sort of an artificial low.

The interesting this in the article cited above is that the Fed may buy up long-term Treasury securities.

Huh? Doesn’t that strike you as the the same as an average American paying off one credit card balance with a new credit card, to allow more room for spending on the original card? That was my first impression.

So, we will see. The thing to watch for in the Fed comments is a fear of increasing inflation. I do not expect that at all at the end of this meeting, but the mere mention of inflationary fears will send mortgage rates up. Anything else, should be good for rates. Should is the key there, since the Fed is treading into unchartered waters, and there is no telling how investors will respond.

Is it Time to Refinance?

Jim Duffy — Mon, 22 Dec 2008 11:46:14 +0000

The stories are all over the news, including this one from the Associated Press, that mortgage rates are low.

How low? Well, depending on where you look, anywhere from 37 year lows to All-time lows. I can tell you that from a raw rate standpoint, they are at all-time lows.

So, should you refinance now? The philosopher in me would answer that with one definitive word: Distinguo. (i.e. It depends)

First question to ask yourself – Can you refinance? Many people’s homes are underwater. They owe more than the home is currently worth. If that is your circumstance, then another set of options are available to you outlined in the post that I linked to above. That is, unless you are in an FHA mortgage loan, in which case you can do a Streamlined FHA refinance. Call me and I will walk through how that is done. And, that is a great topic for another post.

Assuming you can refinance, the Second question is, should you? In the simplest form, three things determine whether you should refinance your Atlanta mortgage, or not:

What is your Loan-to-Value? We’ve determined that you do not owe more on the home than it is worth. Now, sometimes higher loan to values carry slightly higher interest rates. Again, for FHA loans, that is not the case. For conventional, if can be.
What is your credit score? Lower credit scores now carry with them either higher discount points to get the best rate, or higher interest rates with no points. This is true of conventional loans, read Fannie and Freddie products. It is substantially less so with FHA loans.
How long will you be in your home? If you are planning on selling in the early Spring, then a refinance won’t make any sense. If not, then the length of time you will likely be in the home matters. If this is it, the last home you will ever buy and you plan to die happily in it, then look at refinancing into the lowest rate possible, paying full closing costs (but I am still not a fan of paying points). If you will be there a while, but know you will be moving on down the road at some point, then I would recommend a slightly higher rate, but low or no closing costs. Why eat up your equity with fees, when you will still be saving a lot each month with a lower rate, and keep the equity in your home.

There are several ways to weigh this. And, other questions, like should you pull cash out and consolidate debt into the new mortgage. That is an option as well. And a good one to consider if that is your circumstance, because of the rising inflation that is just around the corner. Take advantage of the low rates to prepare to weather the storm.

Get Docs in for a Refinance – Lock Today

Jim Duffy — Fri, 12 Dec 2008 14:06:24 +0000

Source: Bankrate.com

The Fed has announced that is will be buying Mortgage Backed Securities (MBS) in an effor to lower mortgage interest rates. Even though they have made two purchases of MBS, and rates are lower, they have been quite volatile still.

On Monday, the Fed is making another multi-billion dollar purchase of the Securities. You can read more about that here. So, I am getting everyone’s docs in that I can, in an effort to lock all the loans on Monday and take advantage of the dip.

As I am calling past clients to get them ready to lock, a few have mentioned that they are ‘waiting for the Fed to get rates to 4.5%’ as was widely reported in news outlets. You must understand that it is not a magic bullet nor a hard and fast target. The only means that the Fed has of lowering mortgage rates is buying MBS, just like rates have always been determined. It is not an exact science. So, when there is a dip, lock.

Will you be ready to take advantage of these low rates and lock in? Call me: 770-518-2440. Let’s be ready.

Want to get things rolling faster, to be ready to lock. Fill out the secure, on-line app here.

How Would You Like That 4.5%, 30 Year Fixed Rate?

Jim Duffy — Wed, 03 Dec 2008 22:34:16 +0000

With or without points?

If Sec. Paulson has his way, it may be the prevailing rate soon. The Wall Street Journal reported today that a plan is being mulled over to use the Federal Government to lower Fannie and Freddie Mac rates, as well as government insured FHA rates to 4.5% for a 30 year fixed rate.

The thought process is that this would help jump-start the housing sector by causing more fence-sitters to jump off and start buying. And, that would allow a whole lot of those folks who have been staring at ‘For Sale’ signs in their front yard to get some activity going and get a buyer -* with the caveat that buyers are still going to be looking for a good deal, and the pricing model of two years ago is no longer valid. Sellers still need to be realistic about prices NOW, not months ago.

The chain reaction that Paulson would hope for, if this plan goes through, is:

Buyers on the sidelines would jump in an buy, especially First time homebuyers using low rate FHA financing, then -
Move-up buyers would begin to buy the next price tier up, reducing the glut of inventory of homes, then -
homeowners in trouble or about to be in trouble would refinance at the low, 4.5% rate, and stave off possible foreclosure, then -
The log-jam of homes in pre-foreclosure and on the market around Atlanta would begin to dissipate, then -
Credit would begin to free up again, and lenders would come back into the market with some of the other loans that make sense and perform well, such as higher LTV Jumbo financing.

So, if the plan is approved, look to jump into the market early. My suggestion would be to get pre-approved – and of course I can help with that – and begin to work with a Realtor to narrow down the right home. Then, jump on it and put in an offer as soon as rates come down; if indeed all this comes to pass.

The reason that I would jump on it is not only because we do not know how long rates will remain low; but more importantly because the plan just might work. If it does, then as soon as sentiment towards the housing market begins to change to positive again, sellers will remain more firm with their asking prices and those prices will stabalize and begin to rise again.

This time around, the Early Bird will get the worm.

No More Foreclosures for the Holidays

Jim Duffy — Thu, 20 Nov 2008 22:05:07 +0000

Freddie Mac and Fannie Mae announced today that they would stop foreclosures altogether from November 26 – January 9. That is the day before Thanksgiving through the end of the week of Epiphany.

So, a little present to be thankful for. The reason that Fannie and Freddie are stopping foreclosures of occupied single-family homes is to give servicers of Fannie and Freddie loans time to modify the loans under the streamlined modification program that goes into effect on December 15.

That is the governments program that goes along with the bailout bill to adjust the term or the interest rate of the loan, and in some cases to extend the repayment of some principle balance to the end of the loan, as a balloon note. To qualify the homeowner has to be 90 days or greater delinquent on his mortgage, and not have filed for bankruptcy.

I would suspect that other servicers will begin to follow suit, and will get even more aggressive in modifying loans that they own and service.

This means that around metro Atlanta, the courthouse steps will be a lot more empty on the first Tuesday of December and January. And, a lot of folks who were sweating the holidays coming, will have a Christmas cheer, and plenty to be thankful for, after all.

The TARP that Didn’t Cover

Jim Duffy — Thu, 13 Nov 2008 00:00:45 +0000

Dow drops 400 on Paulson Turnabout

The TARP (Troubled Asset Relief Program) was part of the bailout bill. You may remember the one, that paultry $700B taxpayer dollars set aside to purchase troubled bank assets, or loan portfolios. All that changed today.

A lot of people were up in arms over the bailout; yet I have stood firm saying that if it works out as they laid out the plan to buy troubled loan portfolios, then the government will actually make money on those over time. In fact, simply changing the Mark-to-market laws would possibly have been sufficient to not require a bailout program at all. But, the bailout was passed, and the way it was presented the bailout still made sense. It would have been a profit for the Federal Government – over time – not a drain like it was portrayed.

All that changed this morning, when Treasury Secretary Paulson announced that the funds would not go to buy distressed mortgage assets after all. Rather, they would go to purchase stock in banks. It makes it very difficult to judge the effectiveness of a moving target. Some part of this experiment must be the control; otherwise it is tough to judge what is and is not effective. That’s one problem that I see.

At the same time, Fannie and Freddie are going to aggressively modify mortgages that are at least 90 days in default. And they will modify to make the debt-to-income ratio no greater than 38% of gross household income. And Paulson will encourage other banks to do the same or similar aggressive loan modification programs for borrowers in default.

No telling how this will play out for homeowners in need of some relief, and I am sure there will be other changes along the way. For now, it appears that Paulson has come up with a way to leverage the $700B to use many more taxpayer dollars for Fannie and Freddie to modify loans.

And tomorrow, it could all be different…