In this first segment, Daniel gives you a detailed laydown for the second installment for the HARP program (HARP 2.0). This refinancing option may help lower your mortgage payments! Remember to stay tuned into our website or social medias to see the upcoming mortgage videos.

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Danny Salas of Access Real Estate Lending in Chico, Ca.
Video Produced by: Alpine – For Access Real Estate Lending 2012.

*This industry changes rapidly and on a daily basis, information after posting may be subject to change.

Listen to Daniel C. Salas’s important new local radio segment on Real Estate Today Radio 1290 AM. Hear why electronically filing your taxes to the IRS could be a big problem if you plan on getting a home loan.

Related Article on Tax Filing

Paradise Relay for Life

Daniel C. Salas is a member of Paradise Rotary, and this year, Rotary has joined a Relay4Life team, “Corral Cancer”, in hopes to bring an end to cancer for its crimes against humanity. So far, Corral Cancer has raised $5,559.97 of a $10,000 goal! The team has some great fun-filled community events to help promote awareness of the event and raise donations leading up to the actual Relay on June 2, 2012 at Paradise High School. Every dollar raised brings us one dollar closer to a cure, and to a world with more birthdays. We hope you can be a part of this great cause in whichever way you like.

Crimes Against Humanity

Cancer is a disease that has affected almost all of you in one way or another, in one form or another. Many are battling it, survived it, or lost a loved one(s) to it. Today, 38.08 (1 in 3) woman are at risk for developing an invasive type of cancer while 44.85% (1 in 2) men are at risk. The American Cancer Society has created Relay4Life, a huge nationwide event that helps raise money for the research, education/awareness, and triumph of cancer. Participants of Relay For Life celebrate loved ones who have won their battle against cancer, remember those who are no longer with us, and fight back against this disease that touches so many.

You may Volunteer, Join, or Donate Here

Or by sending a check made payable to the
‘American Cancer Society’
7054 Skyway, Paradise, CA 95969 – (Rob Anderson, CFP®, Rotarian Team Captain)

Please Follow Corral Cancer for updates on Local Community Events and other information:

First Community Event! Celebrity Dinner

Be Served by Local Celebrities, A Good Meal For a Good Cause.

When: Tuesday March 27th
Time: 4pm – 8pm
Where: Black Bear Diner
5791 Clark Road, Paradise

Donations for Relay4Life will be accepted and 10% of the evening’s proceed will be donated by Black Bear Diner!

For More information and a list of featured Celebrity Servers

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Last Thursday, February 23 2012, HUD (the Department of Housing and Urban Development) issued a new proposed rule (of three) that would aid in restoring the MMIF (Mutual Mortgage Insurance Fund) reserve account.
The Department of Housing and Urban Development this week reissued a proposed rule that would reduce by half the maximum allowable seller concessions in an FHA loan transaction to 3%.

I highly encouraged everyone to take action IMMEDIATELY to submit your comments to the FHA regarding the reduction of the seller concessions to a maximum of 3% or $6,000 whichever is greater.

Please read the notice below to see HUD’s points regarding why they wish to reduce the maximum amount of seller concessions. Some good arguments are made by HUD to do so…However, in the grand scheme of things within the housing market today and the view that I see from the ground floor, now is NOT the time to move forward with this proposal.

How it Affects You
Borrowers need every penny of a seller concession. Considering that down payment and funds to close is the largest hurdle to homebuyers today, this action will have a negative impact on the pool of potential home-buyers…. particularly in high closing cost states.

In order to get FHA and HUD to stop this regulation from going through, we ask you to read over the proposed rule and then send in your voice. Please also let anyone else related to the housing industry about this call to action.

Read HUD’s proposal reasons here

Use your rights and let the government know YOUR opinion! Comment on the Revised Seller Concessions

National Mortgage Professional Magazine’s Summary

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As most of you already know President Obama has already initiated a 10 basis point increase on all loans administered by Fannie Mae, Freddie Mac and the FHA. As far as FHA loans are concerned this change will be implemented by an increase of 10 basis points to the annual MIP Premium. In addition to this increase, HUD will be adding an additional 25 basis points to FHA loans that exceed the 625k loan amount for a total of a 35 basis point increase. HUD also discussed the high likely hood of adding another, yet to be determined, sum top of all of this to help shore up the depleted FHA MIP fund.

What does this mean to you?

What this all means is there will be a material increase to FHA financing, especially for loan amounts that exceed $625k (do not worry, Butte County’s FHA Loan limits remain at $400,000) and will go into effect in April of 2012. There will be a mortgagee letter released within the next couple weeks to cover all of these details.

**If you have buyers that are planning to utilize FHA financing to acquire a new home, it would be a good idea to get these fence sitter’s to consider acting on their financing needs before these changes are implemented in April 2012.**

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(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, causing Escrows not to close on time!

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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The VA is alerting lenders that it is possible that Congress may pass legislation in the near future increasing the limits. Please note that the limits apply for loans closed from January 1, 2012 through September 30, 2012

2012 VA County Loan Limits from US Department of Veteran Affairs

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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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