Guest Author:

Bob Chiodo, CFPbob-ciodo-pic

Equity Home Mortgage, LLC.

www.ResCommLending.com

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Estimated Rates for the week of November 9, 2009*

  • 30 year fixed=4.750-4.875
  • 30 year jumbo=5.50 to $500k; 5.75 – 5.875 above
  • 7/1 ARM=4.00 – 4.25 various programs are available
  • FHA/VA=4.75 – 5.00
  • OR Vet=4.50 w/1.50 – 4.625 w/1.00

It’s been a while since my last update but it’s certainly not due to a lack of news in the mortgage world. As you can see, rates are still down and doing great. We all know that these won’t last forever but we should remain in a narrow range for the next month or so. And since the 1st time homebuyer tax credit was extended, I think buyers should immediately consider taking the necessary steps to get their first home.

I thought I would take a moment to talk about the impact foreclosures and the alternatives to foreclosure have on a consumer’s credit. This is meant to be just a guideline – lenders can and will have their own rules and these rules change often.  On the research that I have done, it appears that most lenders – as well as the credit bureaus – treat a foreclosure, short sale, or deed-in-lieu of as the same in terms of the impact it has on a borrower’s credit profile. After speaking with an underwriter, it appears that FHA requires that a foreclosure or the alternative to be three years before new financing can take place. For VA, it looks like it is two years. Conventional is more convoluted. Per a recent Fannie Mae announcement, foreclosures have a 5 year time frame with additional requirements up to 7 years (principal residence only, 10% down and a 680 credit score). Deed-in-lieu of’s are 4 years with additional requirements up to 7 years. It appears, however, that short sales have only a two year waiting period. Most of these rules do allow exceptions for extenuating circumstances – which, of course, is very subjective. Now, of course, all of these programs require certain credit scores – conventional being higher than FHA. If the credit bureau dings a consumer’s credit hard for a short sale – as I heard that they do – the loan won’t be able go through with the poor scores. So we are back looking at an FHA loan with the three year wait period. I have also heard that some of the banks are going after borrowers after the short sale is completed and requiring the borrower to cover the short fall. If the credit hit is considered the same and the bank tries to collect on the short amount, it makes one wonder why a borrower would do a short sale in the first place. In any of the above circumstance, the key thing for a consumer to do after completion of a foreclosure (or alternative) is to immediately start rebuilding their credit. Getting a secured credit card would be a great start and working with someone is specializes in this area could well be worth the time and effort.

For homeowners facing foreclosure in Oregon, the state recently passed a bill that requires lenders to meet with borrowers either by phone or in person to evaluate whether the homeowner qualifies for a loan modification. Oregonians should watch their mail for the new notice. They have 30 days to act from the date of the notice to request a loan mod. Once received, they should call their lender to set up a meeting, complete the request form provided in the notice and call 1-800-SAFENET and ask for a referral to a nonprofit foreclosure counselor to help with the modification.

There is a lot more going on then time and space warrant. Fannie and Freddie are about to tighten up on their debt ratios and FHA just published their new condo rules – spot approvals are still good through the end of January. Fannie just released their Deed-for-Lease program which will allow for homeowners to rent back their home after completing a deed-in-lieu of to Fannie. And, of course, a huge change is about to happen January 1 when the new RESPA guidelines take place. More about all of this later.

Thanks for reading and have a great week!

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Credit scores, down payment, and other risk related issues may change the rate. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

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