At the start of December, Congress will likely confirm Mel Watt as the new Director of the Federal Housing Finance Agency (FHFA). Watt would replace current FHFA Director Ed Demarco.
As head of the FHFA, Watt would helm Fannie Mae and Freddie Mac and would be in custody of the popular Home Affordable Refinance Program (HARP). HARP helps underwater homeowners refinance to low mortgage rates that would otherwise be unattainable.
Under Watt, the program sometimes known as “The Obama Refi” is expected to receive a facelift in order to help qualify more U.S. households for the program.
HARP : A Brief Summary Of The Program
The Home Affordable Refinance Program (HARP) was first launched in 2009 as an economic stimulus program; a way to boost consumer spending.
At the time, mortgage rates were falling to new lows, but at the same time, home values were in retreat. Falling home values pushed huge numbers of U.S. homeowners over the benchmark 80% loan-to-value threshold which meant that to refinance their mortgage was impossible without either (1) reducing the loan balance back to 80 percent of the home’s appraised value, or (2) paying private mortgage insurance (PMI).
Neither option was attractive in the tight, late-decade economy. To spur refinance activity, therefore, and to help jumpstart consumer spending, Congress created HARP.
HARP is a refinance program for homeowners who have lost home equity since the date of home purchase; its main trait is that the program waives PMI requirements for homeowners who once had 20% home equity, but now had less.
Via HARP, homeowners can refinance to current mortgage rates without having to pay mortgage insurance.
HARP Eligibility Requirements
There are 3 basic requirements to be HARP-eligible :
- Your loan must have been securitized by Fannie Mae or Freddie Mac
- Your loan’s note date must be no later that May 31, 2009
- You must have made your last 6 mortgage payments on-time, with no lates
These standards cast a wide net over the U.S. populace and, between 2009-2011, homeowners closed on one million loans HARP loans. The government deemed this good progress, but not great progress. So, in late-2011, the HARP program was revamped and expanded to help reach additional U.S. households.
The main features of HARP 2.0 program are that it waives home appraisal requirements, ignores loan-to-value restrictions, and gives homeowners the right to refinance with any mortgage lender nationwide.
Under HARP 2.0, more Obama Refi loans closed in 2012 than during the program’s first three years combined. This year, more than 1.2 million HARP loans are expected to close.
However, even as HARP 2 remains popular with U.S. homeowners, Congress has been discussing ways to make HARP even more inclusive; ways to expand the program’s reach to households who currently fall outside of the program’s basic eligibility standards.
Momentum behind so-called “HARP 3.0″ is now gaining steam. If the program comes to pass as part of Mel Watt’s confirmation to the FHFA, here are four changes HARP 3 may include.
HARP Change 1 : Refinance Alt-A, Subprime Loans Via HARP
In today’s mortgage market, Fannie Mae, Freddie Mac, and the FHA control more than 90% of all new mortgage origination. However, this wasn’t always the case.
Last decade, non-government mortgage lenders commanded a large share of the mortgage market and Alt-A mortgages were among the most common loans they made.
Alt-A mortgages were typically referred to in acronym or shorthand :
- SISA loans (Stated Income, Stated Assets)
- SIVA loans (Stated Income, Verified Assets)
- Lo-Doc loans (Low Documentation Loans)
- No-Doc loans (No Documentation Loans)
Despite high profile default rates, there are still large numbers of “performing” Alt-A loans with Alt-A homeowners who are underwater and unable to refinance via HARP like their conforming homeowner peers.
The same is true for sub-prime borrowers who are similarly locked up.
The case for opening HARP 3 to Alt-A and subprime borrowers becomes especially clear when we consider that the 30-year fixed rate mortgage was cheaper from non-government lenders in 2005 than via Fannie Mae or Freddie Mac.
Large numbers of “prime” homeowners used sub-prime loans in 2005 because the mortgage rates were cheaper.
HARP Change 2 : Allow The “Re-HARP”
Since HARP was first announced in 2009, the average 30-year fixed rate mortgage rate has dropped close to two percentage points. The drop in rates has been a slow one, however.
Rates were in the 5s in 2009 and 2010; fell to the 4s in 2011; and lived in 3s for parts of 2012 and 2013.
Meanwhile, HARP guidelines state that the program may only be used once per household. Therefore, underwater homeowners who used HARP to refinance in 2009 are “stuck” with their HARP mortgage rates from 2009.
Similarly, homeowners using HARP in 2010 are stuck with their HARP mortgage rate from 2010; and homeowners from 2011, and so on.
This one-use restriction takes on added significance since the Federal Reserve launched its third round of qualitative easing (QE3) in September 2012, a program through which the nation’s central banker aims to lower U.S. mortgage rates as far as possible.
Today’s mortgage rates are near 4.25%. Homeowners who HARP-refinanced in 2009 to 5.50% are unable to “re-HARP” to something better .
Should HARP 3 pass, it could implement a feature of the popular FHA Streamline Refinance program — it could give homeowners program-eligibility after 6 payments have been made to the bank. Until then, HARP is one-use only.
HARP Change 3 : Change Cut-Off Date From May 31, 2009
Another HARP 3 change that could put the Home Affordable Refinance Program within reach of more people would be a change in the program’s cut-off date.
Currently, HARP’s eligibility standards require all HARP-refinanced mortgages have a note date of, or prior to, May 31, 2009. This is because — according to a Fannie Mae representative — homeowners whose mortgages come from after this date knew what kind of housing market into which they were buying.
The inference is that HARP was conceived to help homeowners who didn’t know any better.
Even so, among the homeowners who did know better, and still bought a home post May 31, 2009, the spirit of the HARP program should still apply. Many of these homeowners made 20% downpayments and those downpayments have since been lost to the housing downturn.
To help make HARP more uniform nationwide, HARP 3 could be extended to include homeowners refinancing a primary residence for which the mortgage was the note date is post-May 31, 2009. There are many homeowners with mortgages from 2010 who may benefit from a HARP 3 refinance.
HARP Change 4 : Allow HARP Loan Sizes Up To $729,750
The fourth change that should be included in the HARP 3 refinance program is an allowance for “high-balance” loans in designed high-cost area.
First, some background.
Each year, the government releases its mortgage loan limits for Fannie Mae- and Freddie Mac-conforming loans. These figures that represent the maximum-sized loan that the government groups will agree to securitize. Loans which are in excess of these maximum loan limits are called “jumbo” loans.
Since 2006, the conforming loan limit for 1-unit homes has been $417,000. However, in 2009, as part of an economic stimulus plan, areas in which homes were deemed “expensive” were assigned a temporary conforming loan limit increase to $729,750 which was to last until September 30, 2011.
For two-plus years, therefore, home buyers in areas including Orange County, California; New York, New York; and Loudoun County, Virginia could finance up to $729,750 and still be within the maximum loan size limits for Fannie Mae and Freddie Mac.
Then, in October 2011, the loan limits dropped.
Homeowners in high-cost areas could no longer finance up to $729,750 with a conforming mortgage — the limit was dropped to $625,500 — leaving everyone in no-mans land whose conforming mortgage was started between 2009-2011 and for which the remaining balance exceeds $625,500.
So, to remedy this issue, again, HARP 3 can take a page from the FHA Streamline Refinance playbook. So long as the original loan size was within conforming loan limits at the date of original closing, and so long as the refinance doesn’t include “cash out”, the loan size could be approved as-is.
For More information and to see if you qualify call me 314 275-0418 or email me at email@example.com
World War I – known at the time as “The Great War” – officially ended when the Treaty of Versailles was signed on June 28, 1919, in the Palace of Versailles outside the town of Versailles, France. However, fighting ceased seven months earlier when an armistice, or temporary cessation of hostilities, between the Allied nations and Germany went into effect on the eleventh hour of the eleventh day of the eleventh month. For that reason, November 11, 1918, is generally regarded as the end of “the war to end all wars.”
In November 1919, President Wilson proclaimed November 11 as the first commemoration of Armistice Day with the following words: “To us in America, the reflections of Armistice Day will be filled with solemn pride in the heroism of those who died in the country’s service and with gratitude for the victory, both because of the thing from which it has freed us and because of the opportunity it has given America to show her sympathy with peace and justice in the councils of the nations…”
The original concept for the celebration was for a day observed with parades and public meetings and a brief suspension of business beginning at 11:00 a.m.
The United States Congress officially recognized the end of World War I when it passed a concurrent resolution on June 4, 1926, with these words:
Whereas the 11th of November 1918, marked the cessation of the most destructive, sanguinary, and far reaching war in human annals and the resumption by the people of the United States of peaceful relations with other nations, which we hope may never again be severed, and
Whereas it is fitting that the recurring anniversary of this date should be commemorated with thanksgiving and prayer and exercises designed to perpetuate peace through good will and mutual understanding between nations; and
Whereas the legislatures of twenty-seven of our States have already declared November 11 to be a legal holiday: Therefore be it Resolved by the Senate (the House of Representatives concurring), that the President of the United States is requested to issue a proclamation calling upon the officials to display the flag of the United States on all Government buildings on November 11 and inviting the people of the United States to observe the day in schools and churches, or other suitable places, with appropriate ceremonies of friendly relations with all other peoples.
An Act (52 Stat. 351; 5 U. S. Code, Sec. 87a) approved May 13, 1938, made the 11th of November in each year a legal holiday—a day to be dedicated to the cause of world peace and to be thereafter celebrated and known as “Armistice Day.” Armistice Day was primarily a day set aside to honor veterans of World War I, but in 1954, after World War II had required the greatest mobilization of soldiers, sailors, Marines and airmen in the Nation’s history; after American forces had fought aggression in Korea, the 83rd Congress, at the urging of the veterans service organizations, amended the Act of 1938 by striking out the word “Armistice” and inserting in its place the word “Veterans.” With the approval of this legislation (Public Law 380) on June 1, 1954, November 11th became a day to honor American veterans of all wars.
Later that same year, on October 8th, President Dwight D. Eisenhower issued the first “Veterans Day Proclamation” which stated: “In order to insure proper and widespread observance of this anniversary, all veterans, all veterans’ organizations, and the entire citizenry will wish to join hands in the common purpose. Toward this end, I am designating the Administrator of Veterans’ Affairs as Chairman of a Veterans Day National Committee, which shall include such other persons as the Chairman may select, and which will coordinate at the national level necessary planning for the observance. I am also requesting the heads of all departments and agencies of the Executive branch of the Government to assist the National Committee in every way possible.”
On that same day, President Eisenhower sent a letter to the Honorable Harvey V. Higley, Administrator of Veterans’ Affairs (VA), designating him as Chairman of the Veterans Day National Committee.
In 1958, the White House advised VA’s General Counsel that the 1954 designation of the VA Administrator as Chairman of the Veterans Day National Committee applied to all subsequent VA Administrators. Since March 1989 when VA was elevated to a cabinet level department, the Secretary of Veterans Affairs has served as the committee’s chairman.
The Uniform Holiday Bill (Public Law 90-363 (82 Stat. 250)) was signed on June 28, 1968, and was intended to ensure three-day weekends for Federal employees by celebrating four national holidays on Mondays: Washington’s Birthday, Memorial Day, Veterans Day, and Columbus Day. It was thought that these extended weekends would encourage travel, recreational and cultural activities and stimulate greater industrial and commercial production. Many states did not agree with this decision and continued to celebrate the holidays on their original dates.
The first Veterans Day under the new law was observed with much confusion on October 25, 1971. It was quite apparent that the commemoration of this day was a matter of historic and patriotic significance to a great number of our citizens, and so on September 20th, 1975, President Gerald R. Ford signed Public Law 94-97 (89 Stat. 479), which returned the annual observance of Veterans Day to its original date of November 11, beginning in 1978. This action supported the desires of the overwhelming majority of state legislatures, all major veterans service organizations and the American people.
Veterans Day continues to be observed on November 11, regardless of what day of the week on which it falls. The restoration of the observance of Veterans Day to November 11 not only preserves the historical significance of the date, but helps focus attention on the important purpose of Veterans Day: A celebration to honor America’s veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good.
FHA mortgage insurance is available for any loan which meets the following two conditions:
1.The loan must be made by an approved FHA lender
2.The loan must meet the minimum standards of the “FHA Mortgage Guidelines”.
FHA moved to relax its guidelines for borrowers who “experienced periods of financial difficulty due to extenuating circumstances”.
If you’ve experienced any of the following financial difficulties, you may be program-eligible:
• Short sales
•Chapter 7 bankruptcy
•Chapter 13 bankruptcy
Finally the government helping people who have had credit events that may have been beyond your control, and your credit history doesn’t don’t always reflect a person’s true ability or willingness to pay on a mortgage.
Use the Q&A below to learn more about the FHA’s Back to Work – Extenuating Circumstances program.
What is the FHA Back To Work – Extenuating Circumstances program?
The FHA Back To Work – Extenuating Circumstances program is the FHA’s “second chance” for mortgage applicants who have experienced financial hardship as a result of unemployment or severe reduction in income.
Can I use the Back to Work as a first-time home buyer?
Yes, you can use the program as a first-time buyer.
Can I use the Back To Work program as a repeat home buyer?
Yes, you can use the program as a repeat home buyer.
Does the FHA Back To Work program waive the traditional 3-year waiting period after a foreclosure, short sale, or deed-in-lieu?
Yes, the program waives the agency’s three-year waiting period. You no longer need to wait three years to apply for an FHA loan after experiencing a foreclosure, short sale or deed-in-lieu.
Does the Back To Work program waive the traditional 2-year waiting period after bankruptcy?
Yes, the program waives the agency’s two-year waiting period. You no longer need to wait two years to apply for an FHA loan after experiencing a Chapter 7 or Chapter 13 bankruptcy.
Which types of “events” are covered by the FHA Back To Work – Extenuating Circumstances program?
The program can be used by anyone who’s experienced a pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification; or who has entered into a forbearance agreement.
How do I apply for the program?
You can apply for an FHA Back to Work – Extenuating Circumstances mortgage with any FHA-approved lender. The mortgage approval process is the same for any other FHA-insured mortgage.
What are the minimum eligibility requirements of the FHA Back To Work program?
In order to qualify, you must meet several minimum eligibility standards. The first is that you must have experienced an “economic event” (e.g.; pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification, forbearance agreement). The second is that you must demonstrate a full recovery from the event. And, third, you must agree to complete housing counseling prior to closing. You must also show that your household income declined by 20% or more for a period of at least 6 months, which coincided with the above “economic event”.
How do I document a 20% loss of household income for the FHA?
In order to document a 20% loss of household income, you must present federal tax returns or W-2s, or a written Verification of Employment evidencing prior income. For loss of income based on seasonal or part-time employment, two years of seasonal or part-time employment in the same field must be verified and documented as well. Income after the onset of the economic event, which should represent a loss of at least 20% for at least six months, should be verified according to standard FHA guidelines. This may include W-2s, pay stubs, unemployment income receipts, or other. Your lender will help you determine the best method of verification.
How do I document a “satisfactory” credit history since my “economic event” for the FHA?
Your lender will review your credit report as part of the FHA Back To Work approval process. All accounts will be reviewed — ones which went delinquent and ones which remained current. Your lender will attempt to determine three things — that you showed good credit history prior to the economic event; that your derogatory credit occurred after the onset of the economic event; and, that you have re-established a 12-month history of perfect payment history on major accounts. Minor delinquencies are allowed on revolving accounts.
Does the “20 percent loss of income” eligibility condition apply to me only, or to everyone in the household?
The “20 percent loss of income” eligibility condition applies to everyone in the household. If one member of the household lost income as the result of a job less but the household income did not fall by 20 percent or more for a period of at least months, the borrower will not be FHA Ba Extenuating Circumstances-eligible.
Is the FHA Back To Work Program limited by loan size?
No, the program is not limited by loan size. The FHA will always insure up to your area’s local FHA loan limit. Your lender, however, may not. If your lender will not make a loan big enough for your needs, find another FHA-approved lender. There are many of them.
With the FHA Back To Work Program, how soon until I can buy a home after foreclosure?
Via the program, you can buy a home 12 months after a foreclosure.
With the FHA Back To Work Program, how soon until I can buy a home after a short sale?
Via the program, you can buy a home 12 months after a short sale.
With the FHA Back To Work Program, how soon until I can buy a home after a deed-in-lieu of foreclosure?
Via the program, you can buy a home 12 months after a deed-in-lieu of foreclosure.
With the FHA Back To Work Program, how soon until I can buy a home after Chapter 7 bankruptcy?
Via the program, you can buy a home 12 months after filing for Chapter 13 bankruptcy.
With the FHA Back To Work Program, how soon until I can buy a home after Chapter 13 bankruptcy?
Via the program, you can buy a home 12 months after filing for Chapter 13 bankruptcy.
Is there a counseling requirement in order to use the FHA Back To Work program?
Yes, in order to the use the program, you must agree to attend housing counseling.
Why do I need to take housing counseling?
The housing counseling required by the FHA Back To Work program will address the cause of your economic event, and help you consider actions which may prevent reoccurance.
How long is the housing counseling session I am required to take?
The housing counseling required will typically last one hour.
Do I have to take housing counseling in-person?
No, you do not have to take the housing counseling in-person. Housing counseling may also be conducted by phone or via the internet.
If I complete counseling, am I automatically approved for the FHA loan?
No, you are not automatically approved for the FHA loan if you complete the housing counseling required. You must still qualify for the FHA mortgage based on Federal Housing Administration mortgage guidelines and as with government rules and regulations they are ever changing.
What is the minimum credit score requirement for the FHA Back To Work program?
There is no minimum credit score requirement for the FHA Back To Work program, necessarily. The program follows standard FHA mortgage guidelines. Credit scores below 500 are not allowed, but borrowers with no credit score whatsoever remain eligible..
Are modified mortgages eligible for FHA Back To Work?
Yes, modified mortgages are eligible.
Are loans on a payment plan eligible for FHA Back To Work?
Yes, loans on a payment plan are eligible.
I lost my job because my employer went out of business? Does this qualify for the program?
Yes, job loss resulting from an employer going out of business is Back-to-Work eligible. Your lender will ask you to provide a written termination notice or publicly-available documentation of the business closure.
Can I use Unemployment Income receipts to document that I was out of work?
Yes, you can use Unemployment Income receipt to document that you were out of work.
I am still in Chapter 13 bankruptcy. Do I need the court’s permission to enter into the mortgage?
Yes, if your Chapter 13 bankruptcy has not been discharged prior to the date of your loan application, you must have written permission from Bankruptcy Court to enter into the purchase transaction.
When does the FHA Back To Work – Extenuating Circumstances program end?
The FHA Back To Work – Extenuating Circumstances program ends September 30, 2016.
Want More FHA Back To Work – Extenuating Circumstances Information?
You can call me directly or email me to discuss if getting back into a home with FHA is right for you.
VA Loan: Better Than FHA and Conventional?
Backed by the U.S. Department of Veterans Affairs, VA loans are designed to help active-duty military personnel, veterans and certain other groups become homeowners at an affordable cost. The VA loan asks for no down payment, requires no mortgage insurance, allows flexible guidelines for qualification among its many other advantages.
1. No Downpayment
Most home loan programs require you to make at least a small down payment to buy a home. The VA home loan is an exception. Rather than paying 5, 10, 20 percent or more of the home’s purchase price upfront in cash, with a VA loan you can finance up to 100 percent of the purchase price. The VA loan is a true no-money-down opportunity.
2. No Mortgage Insurance
Typically, lenders require you to pay for mortgage insurance if you make a down payment that’s less than 20 percent. This insurance, referred to as private mortgage insurance (PMI) for a conventional loan or a mortgage insurance premium (MIP) for an FHA loan protects the lender in the event that you default on your loan. But a VA loan neither a no down payment nor mortgage insurance. That makes this a VA-backed mortgage very affordable upfront and over time.
3. U.S. Government Guarantee
There’s a reason why the VA loan comes with such favorable terms. The federal government guarantees that a portion of the loan will be repaid to the lender even if you’re unable to make monthly payments for whatever reason. This guarantee encourages and enables lenders to offer VA loans with exceptionally attractive terms to borrowers that want them.
4. Ability to Shop and Compare
VA loans are neither originated nor funded by the VA. Furthermore, mortgage rates for VA loans aren’t set by the VA itself. Instead, VA loans are offered by U.S. banks, savings-and-loans institutions, credit unions and mortgage lenders — each of which sets its own VA loan rates and fees. This means you can shop around and compare loan offers and still choose the VA loan that works best for your budget.
5. No Prepayment Penalty
A VA loan won’t restrict your right to sell your home if you decide you no longer want to own it. There’s no prepayment penalty or early-exit fee no matter within what time frame you decide to sell your home. Furthermore, there are no restrictions regarding a refinance of your VA loan. You can refinance your existing VA loan into another VA loan via the agency’s Interest Rate Reduction Refinance Loan (IRRRL) program or switch into a non-VA loan at any time.
6. Loan Options
A VA loan can have a fixed rate or an adjustable rate. It can be used to buy a house, condo, new-built home, manufactured home, duplex or other types of properties. Or it can be used to refinance your existing mortgage, make repairs or improvement to your home or even make your home more energy efficient. The choices are yours. A VA-approved lender can help you decide.
7. Easy To Qualify
Like all mortgage types, VA loans require specific documentation, an acceptable credit history and sufficient income to make your monthly payments. But, as compared to other loan programs, VA loan guidelines tend to be more flexible. This is made possible because of the VA loan guaranty. The Department of Veterans Affairs genuinely wants to make it easier for you to buy a home or refinance.
8. Lower Closing Costs
The VA limits the closing costs lenders can charge to VA loan applicants. This is another way that a VA loan can be more affordable than other types of loans. Money saved can be used for furniture, moving costs, home improvements or anything else.
9. Funding Fee Flexibility
VA loans require a “funding fee”, an upfront cost based on your loan amount, your type of eligible service, your down payment size plus other factors. Funding fees don’t need to be paid as cash, though. The VA allows it to be financed with the loan, so nothing is due at closing. And not all VA borrowers will pay it. VA funding fees are normally waived for veterans who receive VA disability compensation and for unmarried surviving spouses of veterans who died in service or as a result of a service-connected disability.
10. Assumable Financing
Most VA loans are “assumable,” which means you can transfer your VA loan to a future home buyer if that person is also VA-eligible. Assumable loans can be a huge benefit when you sell your home — especially in a rising mortgage rate environment. If your home loan has today’s low rate and market rates rise in the future, the assumption features of your VA become even more valuable.
The eligibility list for a VA loan is long. Classes and classes of service persons and their families are eligible.
Whether you’re an active-duty service person, a veteran, a member of the National Guard, a Reservist or surviving spouse of a veteran; or if you’re a cadet at the U.S. Military, Air Force or Coast Guard Academy, midshipman at the U.S. Naval Academy or officer at the National Oceanic & Atmospheric Administration, you may be eligible for a VA loan — plus all the benefits that come with it.
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