(Originally written for 2010 taxes, but still applicable and helpful!)

4506-T Form Processing Needs To Be Particular

Requirements for 2011 IRS Transcripts

When filling out an application package, you’ll notice a form called the 4506-T.  This form enables a lender to obtain an electronic print-out of the Federal 1040 Tax Returns that have been filed with the IRS.  If the tax returns provided do not match the computer’s electronic print-out, line-by-line, than the loan may not fund.

Why Buyers should physically take their 2011 Returns to the Local IRS Office

E-filing could be an eight to 12 week wait, before a buyer’s loan may fund.

What If The Print Out Is NOT Available Yet?

Generally speaking, if the electronic print out was not available, than you couldn’t use that year’s income, from the 1040’s.  If 2009 was not a particularly good year, and you need 2011’s income to make certain that your qualifying ratios work, for the home of your dreams…than there’s a dilema.  Answer:

For loans underwritten before April 15, 2011, if the borrower has filed their 2010 tax returns, and the tax transcripts are not yet available, the tax transcript request will be returned from the IRS and reflect “No Record Found”, the following must be provided:

• 2011 Tax Transcript showing “No record or return filed”; and,
• Copy of the 2011 Tax Return, and,
• For Salaried Borrowers: a 2009 and 2010 tax transcript, current paystub and 2011 W-2;
• For Self Employed Borrowers: a 2009 and 2010 transcript, and 2011 1040’s stamped received by local IRS office along with 2009 and 2010 tax returns.

Don’t worry about the transcripts.  Access Real Estate Lending’s Processing Team takes care of ordering and processing the forms, using the 4506-T form, through an IRS portal.

Common Scenario question:

Self Employed borrower has filed their 2011 returns (no transcripts available yet) and they need the 2011 income to qualify for the loan. (Yes) We can drop 2009 income and use 20010 and 2011 provided the 2011 increase is “reasonable.” In order to do this, we must have copies of 2010 tax returns STAMPED received by the local IRS office. Unfortunately the copy of Electronic filing of 2010 returns is not acceptable, a copy, of the 2011 returns, must be a stamped copy, from IRS office.

We will provide further direction the closer we get to April 15, 2012. At that time we can give guidance when borrowers are filing extensions and what will be required. This policy is subject to change as we receive direction from our investors.

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CAPITAL MARKETS

January 2012
Fannie Mae and Freddie Mac Pricing Changes due to Guarantee Fee Increase

As you probably have gathered from the notices you have recently received from other wholesale lenders, investors have immediately implemented the increase in the Fannie Mae and Freddie Mac guarantee fee. We apologize and wish we could have given you more notice. The following schedule illustrates the timing of guarantee fee increase on 45, 30 and 15 day locks.

45 days                                         1/11/2012
30 days                                         1/18/2012
15 days                                          1/23/2012

In addition, we need to temporarily adjust our lock extension and relock fees. Again, this is temporary until the new guarantee fee is completely absorbed. The following schedule illustrates the cost and timing of the our temporary relock and extension policies;

Prior to 2/10/12 0                                                 0
After 2/10/12 50 bps                                         50 bps

As you will see, our pricing, relock and extension fee changes are consistent and in line with what you will see from other lenders.

The following are some FAQ’s that might help explain this:

Why is this occurring?
As directed by the Federal Housing Finance Agency (FHFA), pursuant to the Temporary Payroll Tax Cut continuation Act of 2001, Fannie Mae and Freddie Mac are required to increase the guarantee fee charged for all mortgages delivered on or after April 1, 2012 by 10 basis points. In the next few months, FHFA will further analyze whether additional guarantee fee increases are appropriate to ensure the new requirements of the law are being met.

What is a guarantee fee?
It is a fee charged by mortgage-backed securities (MBS) providers such as Fannie Mae and Freddie Mac, to lenders for bundling, servicing, selling and reporting MBS to investors. The main component of the guarantee fee is charged to protect against credit-related losses in the mortgage portfolio. Think of it as insurance. Commonly known in the mortgage industry as “g-fee”, this is a deduction in relation to the interest rate.

How does a 10 basis points increase in guarantee fee impact my borrower?
A 10 bp increase in g-fee effectively raises the interest rate to the borrower by 12.5 basis points. A 12.5 bp increase in rate generally translates to a 50 bp increase in fee or a 50 bp reduction in rebate. Since all investors have already implemented this increase in their respective pricing structures, you will be seeing the effect of this increase in the rate sheets published by all lenders.

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Recently, the President signed into law a new bill H.R. 2112, called the Consolidated and Further  Continuing Appropriations Act of 2012. In response to this new legislation, HUD has issued Mortgagee Letter 2011-39 detailing the acceptance and timing of the return to higher FHA loan limits.

Visit HUD’s FHA Mortgage Limits webpage for a simple way to find out your loan limits

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If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP. 

To see if your home loan is serviced by Fannie Mae, go to:  http://www.fanniemae.com/loanlookup/  

To see if your loan is currently serviced by Freddie Mac go to:  www.freddiemac.com/mymortgage

See the Federal Housing Finance Agency’s News Release on HARP changes go to:  http://accessloans.net/2011/10/24/harp-changes-to-reach-more-borrowers/

Clearing Up (or Causing More) Confusion on HARP Loans

The Federal Housing Finance Agency (FHFA) recently announced changes to the Home Affordable Refinance Program (HARP) to assist more home owners with the ability to refinance their homes, and save themselves from foreclosure.  While this announcement has grabbed the attention of the news media and the public, it needs to be understood that this is an update to HARP, not an introduction to HARP.  These loans have been in place for years; however, the guidelines have been updated to assist more borrowers with more opportunities than we have experienced in the past.  However, eligibility for these loan programs will not start until December 1, 2011, and it may take time for the GSE’s (Fannie Mae and Freddie Mac) to get contracts solidified with individual banks.  So patients, regarding true availability of these loan programs, must be expected. 

HARP, consists of Fannie Mae and Freddie Mac loans whereby borrowers may refinance their existing mortgage, lower the interest rate, and therefore payments, even if they were under water or had no equity in their homes.  Old guidelines enabled people to refinance up to 125% of their homes’ value, while new guidelines will not limit the loan to value…so, you, potentially, could refinance a $200,000 loan, even if your home is worth $100,000.

Also, with the old guidelines, you were limited to 105% of the value of your home, if you had a second mortgage, that was going to stay on the home, and the two loans combined could not exceed 125% of the value of the home.  This has changed as well. 

Fannie Mae participates in HARP via a loan called “RefiPlus.”   Freddie Mac participates in HARP via a loan called, “Open Access.”  Fore simplicity purposes, I will discuss Fannie Mae’s RefiPlus program, however, similar rules follow Freddie Mac’s Open Access’ eligibilities. 

One of the biggest changes is the cost of these loans.  Here’s what needs to be understood:  With risk, there’s cost.  For example, if someone is buying an investment home, that’s a riskier loan for the GSE’s to sell, so they are more expensive loans.  You can pay those fees up front, or you can increase the interest rate on that loan, absorbing all, or a portion, of the additional fees.  Same thing with these HARP loans!  If you have no equity, it’s riskier for the bank, and therefore, the GSE’s would charge more money, when you delivered the HARP loans to them…and therefore, the bank would pass those fees onto the consumer.  What the Enhanced HARP Guidelines have done, is lower those delivery fees, so that it can benefit more people by keeping those costs, and therefore interest rates, down. 

In the past you couldn’t be late on any mortgage payment, in the past twelve months to qualify.  Now, it’s going to just be the past six months.  If your payment is increasing by 20% (from an adjustable to a fixed rate mortgage) you must meet other guidelines in order to be eligible, but you still may be eligible.  If you have had a bankruptcy or foreclosure, you may not have to wait the traditional four to seven years, in order to be eligible.  If your loan amount is greater than 80% of the value of your home, the maximum amount of increased cost, or delivery fees, to the GSE’s will be .75% Points.  A fraction of what we’ve seen in the past.  These fee changes will not go into effect for loans delivered to the GSE’s until January 1, 2012. 

So, you’ll notice that the application dates, for eligibility are December 1, 2011; however, the delivery of these loans to the GSE’s are January 1, 2012.  These dates aren’t too far apart; however, you’ll notice that they are particular, regarding when you make take an application, qualify for the new program, qualify for the lower fees associated with the enhanced program, and delivery of that loan to the GSE’s.  All of these particulars must be hashed out behind the scenes, before eligibility for consumers may be taken advantage of.  Banks need to have their internal guidelines changed, to accommodate, and educate their underwriters, staff, etc., on qualifying and delivering these loans in an appropriate manner. 

So, the changes are coming, however, we must be patient.  This IS an opportunity that should increase more HARP volume, and save more Americans from foreclosure.

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  Need to finance home renovations?
Does a friend or family member have a fixer upper?

Own a new fixed up home in a maximum of 60 days, with this popular home remodel loan. Access is a trusted and experienced direct lender that has been able to get some of these loans through escrow in as little as 30 days.  We can get you preapproved over the phone before the offer is written. As all contracts are different, we will also set you up with the right agent.

Along with 203(k), Access is Experienced With:

HomePath ♦ HomePath Renovation ♦ Conventional ♦ FHA ♦ Reverse ♦ VA ♦ Spec: Residential Construction

For Real Estate Agents:

HUD 203(k) Seminar:   Learn how to correctly write HUD home contracts

When:  Monday, November 14th

Where:  Chico Association of Realtors
                   1160 East 1st Avenue, Chico, CA, 95926

Time:  9:00 A.M

Facebook Event

Presented by: Tammy Waller of Waller Real Estate & Access Real Estate Lending

Programs to be affected:

• Fannie Mae High Balance
• Freddie Mac Super Conforming
• FHA High Balance
• Fannie Mae High Balance HomePath
• Fannie High Balance DU Refi Plus
• Freddie Mac High Balance Rate Relief
• Freddie Mac High Balance Rate Relief Open Access

*Except counties at the lowest maximum of $271,050 and those that still stayed above $417,000

After September 30, 2011, the calculation for the permanent loan limits (as announced via the Housing and Economic Recovery Act in late 2008) will be implemented.

All loans impacted by the High Balance temporary loan limits must fund on or before Friday, September 30, 2011. In order to close on time, a complete loan package must be received in registrations by Friday, September 9, 2011.

To Look up Mortgage Limits: https://entp.hud.gov/idapp/html/hicostlook.cfm

Below is a comparison of the FHA expiring limits and new limits after September 30, 2011.

Links below are for any additional information you may need.

Complete schedules of FHA mortgage limits for all areas for forward mortgages will be available through the downloadable file links found at https://entp.hud.gov/idapp/html/hicostlook.cfm The website also provides a current look-up tool that will have the capability

Market Analysis Brief: http://portal.hud.gov/hudportal/documents/huddoc?id=FHA_Loan_Limits_HERA.pdf

FHA publications at HudClips: http://www.hud.gov/offices/adm/hudclips/index.cfm  Order hardcopies at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/dds

 FHA forms: http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/hudclips/forms

 FHA Homeownership Centers: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hoc/hsghocs

 Events & Training Calendar: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/events/events

 Contracting Opportunities: http://portal.hud.gov/portal/page/portal/HUD/program_offices/cpo

 Career opportunities: http://www.usajobs.opm.gov/

 Grant opportunities: http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/grants/fundsavail

 Presidentially Declared Disaster Areas: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/disaster

 Foreclosure Assistance: http://portal.hud.gov/hudportal/HUD?src=/i_want_to/talk_to_a_housing_counselor

 Making Home Affordable: http://www.makinghomeaffordable.gov/pages/default.aspx 

This list does not provide HudHome property listings. To see the latest list of all HudHomes nationwide please visit: http://hudhomestore.com/HudHome/Index.aspx

 This list will often provide training opportunities and event announcements for non-profit and local government HUD partners. HUD does not endorse the organizations sponsoring linked websites, and do not endorse the views they express or the products/services they or their community/business partners offer. For more information on HUD’s web policies please visit: http://www.hud.gov/assist/webpolicies.cfm

Danny Salas on Real Estate Today Radio Explains why now is the most affordable time to buy.

The National Association of Realtors’ Housing Affordability Index recently shed light on something quite exciting:  A forty-year record level reading! 

The index has been reporting data, on housing, since 1970, and it’s never been more affordable to purchase a new home.  If you want to purchase a home, keep in mind I’m only speaking statistically; this is the time to buy! It’s imperative that you study your financial strength with a competent financial advisor, and mortgage banking specialist, to determine if you’re ready to buy.  Do you have your financing in order, or your housing budget at a comfortable level?  If you’re considering around a five-year, seven-year, or longer, investment, than it just might not get any better than the present.

The Composite Index of Housing Affordability read at 182.7.  This is, again, the highest level in the forty-one years of reporting the data.  In 1981, the index was the lowest it has ever been, at 68.9  Interest rates were at approximately 18%.  Think about that…it’s more than two and a half times more affordable to buy a home, than it was in 1981. 

Some of the data that is considered, regarding the Housing Affordability Index is the Median Sales Price, Interest Rates, monthly payments, and qualifying income.  Obviously, sales price and interest rates, determine payments, but what’s interesting is qualifying income.  With unemployment levels so low, nationally and locally, the surprising statistic might be qualifying income, however, bear in mind that with prices SO low, and interest rates SO low, as well…income simply doesn’t HAVE to be as high, to qualify for that median priced home.  Very exciting news! 

You will want to take somewhat of an urgent move, if you’ve positioned yourself structurally sound to buy.  Keep in mind that if rates move just one percent upwardly, home values would have to fall OVER ten percent in order for you to keep the same monthly payment.  If the United States’ debt ceiling issue creates more panic, in the markets, like Lehman Brothers’ panic, post mortgage credit crisis, and rates move to 7.5%, then you’ll need values to drop over THIRTY PERCENT, in order to keep your payments at the same levels.  This index is not going to stay at these level forever!  I did write about this, on my blog-page, back in November of 2009.  Even then, most experts felt that rates will steadily increase over that next twelve months, however, as European Countries struggled financially, mortgage-backed securities, and other bonds, were a safe-haven for investors, keeping our rates low.  This, also, will not last forever, and if you’ve determined that you’re ready to buy…BUY! 

Check out the Blog Article at:  http://accessloans.net/2009/11/11/why-buy-now-why-rate-outweights-price/

Where Are Interest Rates Going?

 First of all, QE II has ended.  There are mixed feelings regarding how this effected The United States.  First, you cannot ignore that since the announcement of QE II, Stocks have increased an average of 34%.  So, while QE I was primarily designed to purchase bonds, and keep interest rates low, QE II focused on pumping more money into Stocks and other commodities.  This is generally, not good for interest rates, however, again, with European concerns, bonds and Mortgage-Backed Securities remained a healthy, safe investment, for foreign markets, keeping our rates low.  The effect of QE II, on the economy, is also argumentatively, positive.  When you lift the market, you lift the spirit of investors.  When investors’ spirits are up, they spend.  However, it hasn’t done much for employment, or eighty, or more percent, of the nation.  So, the help in the economy really came indirectly.  QE III?  Perhaps.  If they announce another plan to print money, and buy stocks, or US Treasuries, Bonds, etc., it might just scare the market too much, and the value of the dollar could plummet.  So, the QE III plan, might just be a statement from the Federal Reserve that they are, “interested in keeping the markets moving, by a structured, secure purchasing plan of Stocks, Bonds, AND Commodities.”  Who knows?  If there isn’t a release of QE III, expect higher rates, to gradually occur, if there’s a release of QE III…and they print more money…expect higher rates when the result of more printed money, is inflation (interest rates’ worst enemy).

One of the only factors that could keep rates lower, would be if the economy starts to heat up, enough, for investors, and banks, to start purchasing the US Treasuries that our government has already purchased…to keep the market moving.  When and if that ever happens…rates will stay low.  My money’s on one of the earlier comments, as when have you seen Banks come to the rescue of the United States?  Or, is that an oxymoron?