What Type Of Mortgages Are Still Available?

Well….August 2007 is over.... let us all give a big sigh of relief. Do you realize that you have sat on the “front row” of history this month (whether we wanted to be there or not!)? The lending industry as we knew it 30 days has changed forever (or as long as memory will serve as a boundary). Per www.ml-implode.com, we have lost 144 medium/large retail or wholesale lenders as of today. So what type of mortgages are still available? As of today (and subject to change), read below…..

FHA- Still an awesome loan!

No minimum FICO score- FHA allows “common-sense” decisions.

Maximum loan amount for Dallas, Kaufman, Collin, Denton, Rockwall and Hunt Counties is $200,160 (Sales price of 204,760 with the 2.25 downpayment)

Minimum Down Payment is 2.250%, but can roll in all cost with $0 out of pocket.

Buyer must make a 3% investment unless down payment is paid as a Grant/Charity (DAP) contribution.

Seller can contribute up to 6% of the Sales Price without using a Charity (DAP) contribution.

No Termite Inspection Required.

No Non-Allowables required for the seller.

Buyer can currently be in a Chapter 13 Bankruptcy.

It is an assumable loan (important when rates go to 8% and they are at 6%).

Buyer can have Federal Tax Liens and not have to pay them off!

FHA is now using the standard Fannie Mae appraisal form- No more VC sheets!

(Did you know that we are #4^th Team in the industry for FHA purchase closings last year? Don’t let inexperienced loan officers “practice” on your clients- let us help!)

Freddie/Fannie-

Conforming up to $417,000.

AU (Automatic Underwriting) has tightened significantly.

Lender paid mortgage insurance and/or Buyer/Seller paid mortgage insurance becoming a popular option for borrowers.

Investment Properties up to 90% LTV (10 % down)

$0 Down Mortgage Programs Still Available:

Fannie Mae My Community Mortgage

House America Mortgage

Flex 100

Freddie 100

Freddie Mac Home Possible

Dream Maker Mortgage

Home Run Mortgage

Home Opportunities Program

Expanded Financing Alternatives Program

Emerging Market Programs

80/20 (Note that the criteria for 2^nd liens has tightened significantly)

USDA-

No Down Payment to Qualified Borrowers

No Monthly Mortgage Insurance

Seller can pay UNLIMITED toward closing costs and prepaids!

$0 Move-In Possible for Qualified Borrowers

No Cash Reserve Requirements

Must Purchase in an Eligible Rural Area* (Contact us for the complete list- this is one of our specialty loans!)

VA-

NO Minimum FICO score is required*

There is NO downpayment required!

Seller can pay any/all of reasonable buyer’s closing cost!

Buyer CAN currently be in chapter 13 BANKRUPTCY*

Sales Price can go up to $417,000*

Can have unpaid collections

Can go as low as an 4.20 Fixed Rate if used in conjunction with a Texas Veterans Land Board program.*

*Some limitations apply

VA and TVLB loans are unique- trust them only to loan teams who know them well- we are experts in these- let us help!

Reduced Doc Loans-

This is one of the areas that has had the most changes. A large majority of the “Alt A” market has practically gone away. Stated loans are still available with excellent credit at 5% down and 10% down with FICO scores 620 or above. Stated loans below 600 typically does not exist regardless of downpayment.

Investor Financing-

$417,000 for qualified full doc borrowers w/ 10% down (Freddie/Fannie)

95% investor financing still available for extremely qualified borrowers

Remember the 100% investor financing, stated income loans?…… As Kelly Clarkson sings…. Never Again!

Jumbo Loans-

Earlier in the month rates shot up over night. We are now seeing an improvement to pricing. Loans up to 2,000,000 will require anywhere from 5%-30% down (depending on multiple factors)

2^nd Liens-

80/20 and 75/25 financing is still available, however, minimum FICO scores has increased, as well as requirements for reserves and debt-to-income requirements. This is a very shaky market, so buyer (and seller) beware before closing.

Reminder that PMI is tax deductible as of January 2007 for borrowers making less than $100,000 yearly.

GOOD NEIGHBOR NEXT DOOR PROGRAM

Did you know that HUD has a wonderful program that allows specific clients to purchase a HUD home at 50% of value? Below you will find information on this as well as web links.

Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return they must commit to live in the property for 36 months as their sole residence.

How the Program Works

Eligible Single Family homes located in revitalization areas (http://www.hud.gov/offices/hsg/sfh/revite/abtrevt.cfmare) listed exclusively for sales through the Good Neighbor Next Door Sales program. Properties are available for purchase through the program for five days.

How to Participate in Good Neighbor Next Door

Check the listings for your state (http://www.hud.gov/homes/index.cfm). Follow the instructions to submit interest in purchasing a specific home. If more than one person submits on a single home a selection will be made by random lottery. Buyer must meet the requirements (http://www.hud.gov/offices/hsg/sfh/reo/goodn/particip.cfm) for a law enforcement officer, teacher, firefighter or emergency medical technician and comply with HUD's regulations for the program.

HUD requires that buyer sign a second mortgage and note (http://www.hud.gov/offices/hsg/sfh/nsc/gnndserv.cfm) for the discount amount. No interest or payments are required on this "silent second" provided that they fulfill the three-year occupancy requirement (http://www.hud.gov/offices/hsg/sfh/nsc/gnndserv.cfm).

The number of properties available is limited and the list of available properties changes weekly.

Q&A: Good Neighbor Next Door Sales

Question: What Is the Good Neighbor Next Door (GNND) Sales Program? Answer: HUD wants to strengthen America's communities. The Good Neighbor Next Door Program offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount. Question: Am I Eligible for the GNND Sales Program? Answer: Law enforcement officers, teachers and firefighters/emergency medical technicians and who meet all other requirements of the program are eligible to purchase an available home. Question: How Much of a Discount Can I Get on a HUD Home? Answer: You can get a 50 percent discount off the HUD appraised value. For example, if HUD lists a home at $100,000, you can buy it for $50,000 provided, you occupy the home as your personal residence for the required occupancy period. If you qualify for any FHA-insured mortgage program, your downpayment is only $100 and you may finance (roll in) closing costs. Question: What Kind of Mortgage Financing Do I Need? Answer: You may use FHA, VA, or conventional mortgages, or cash. HUD requires you to sign a Second Mortgage and Note on the discounted amount (which is $50,000 in the example above). No interest or payments are required on this "silent second" mortgage if you live in the home for the entire 36 month occupancy period. You may be required to pay a pro-rata portion of the discount to HUD should you fail to fulfill the three year occupancy requirement. Question: What is the Occupancy Period? You must live in the home as your sole residence for a full 36 months. The purpose of the program is to strengthen communities by encouraging employed, professional law enforcement officers, teachers and firefighters/emergency medical technicians to live in the community. You will have 30, 90 or 180 days to move into the home you purchase, depending on HUD's determination of the condition of the home and the level of repairs that may be required, if any. The 30th, 90th or 180th day is the start date for the occupancy period. Your are released from all obligations under this program at the end of the 36th month following the start date. HUD views the occupancy obligation seriously and vigorously pursues violators to the fullest extent of the law. Question: What Is an FHA Rehabilitation Mortgage and How Can It Help Me Buy a HUD Home? Answer: The FHA 203(k) mortgage program helps homebuyers buy a home and have enough money to rehabilitate or repair it. Repairs must cost more than $5,000. The cost of the repairs and the mortgage are combined into a single monthly payment. Consider FHA’s 203(b) program if needed repairs are under $5,000. FHA also has a new Streamlined 203(k) program which may be useful. Discuss these financing options with your lender! Question: Can I Sell the GNND Home after 3-years and Keep the Profit? Answer: Yes. After you live in the GNND home 3 years, you can sell the home and keep any equity and/or appreciation. Question: Do I Have to Use a Real Estate Broker or Agent to Buy a GNND Home? Answer: Yes. Question: Do I Have to Be a First Time Homebuyer to Take Advantage of the Program? Answer: No. However, you may not own any other residential real property at the time you submit your offer to purchase a home and for one year previous to that date. For example, if you submit an offer to purchase a home on August 1, 2007, you may not have owned a home during the period from July 31, 2006. Question: Where Are These Homes Located? Answer: The HUD homes are located in designated Revitalization Areas. There are hundreds of Revitalization Areas located in the United States. Question: Does HUD Provide a Home Warranty? Answer: No. All GNND homes are sold "as is," without any kind of warranty. Question: Can I Buy Multiple Unit Properties (E.g., Duplexes, Triplexes, Etc.) through the Officer Next Door Program? Answer: No. You can only buy single unit homes, townhouses, and condominiums through the GNND Program. Question: Do I Have to Pay Earnest Money or Other Deposits in Order to Submit a Contract for a GNND Home? Answer: Yes. The amount of the earnest money deposit required is an amount equal to one percent of the list price, but no less than $500 and no more than $2,000. HUD considers all offers to be a commitment to purchase a home if you are awarded the sale. Therefore, please carefully consider your offer and be aware of HUD's policy on earnest money as stated here: If an offer is accepted, the earnest money deposit will be credited to the purchaser at closing. If the offer is rejected, the earnest money deposit will be returned. Earnest money deposits are subject to total forfeiture for failure of the participant to close a sale. Question: Can I Bargain with HUD on the Price of a GNND Property? Answer: No. You must offer the exact HUD list price when bidding on any GNND property. Then you get a 50 percent discount off of that list price. Question: What if I Leave the employment, that made me eligible, for Any Reason, during the Mandatory 3-year Residency Period? Answer: Nothing happens, but you must continue to live in the home for the full 36-month mandatory occupancy period. If you move out of the GNND home, you will have to repay HUD on a prorated schedule. In addition, you must certify that it is your good faith intention to remain employed as a law enforcement officer, teacher or firefighter/emergency medical technician for one year beginning with your purchase. Do no attempt to participate in the program if you know in advance that you will not be employed as required for at least one year. Question: Some Agencies Have Other Homebuying Programs. Can the GNND Program Work in Conjunction with These? Answer: Yes, as long as you can meet all the GNND program rules while participating in these other programs. Question: What Happens if a Participant Fails to Honor the 3-year Occupancy Requirement? Answer: HUD can demand repayment of the discounted amount on a prorated basis. That means you would have to repay 1/36th of the discount you received for each month that you did not occupy the home. HUD also may initiate administrative sanctions including, but not limited to, barring the officer from participating in any HUD/FHA programs, as well as other federal programs. In any case of fraud or abuse, HUD will refer the case to HUD's Office of the Inspector General for investigation and possible criminal prosecution. HUD may also notify the officer's employing agency. Criminal prosecution and conviction for fraud and abuse concerning the GNND Program can result in a fine of up to $250,000 and/or two years in federal prison. Question: How Does HUD Enforce the 3-year Residency Requirement? Answer: The participant must certify he or she is living in the GNND home as a sole residence at the time of purchase and each year after that. HUD can conduct spot checks to make sure the GNND home is your sole residence at any time during the 3-year period. You also must sign a note and mortgage for the discount amount. HUD may foreclose this mortgage if you do not comply with the 36-month occupancy requirement