Nav Thakur

Apr

30

Get Your Free Under Water Analysis!

April 30, 2012 | Housing  |  Leave a Comment

What Is HARP?

HARP was started in April 2009. It goes by several names. The government calls it HARP, as in Home Affordable Refinance Program. The program is also known as the Making Home Affordable plan, the Obama Refinance Plan, The Obama 105% and The Obama 125%. You also may, although I doubt it may here some trade lingo where we refer to it as a DU Refi Plus and Relief Refinance.

In order to be eligible for the HARP refinance program:

1.Your loan must be backed by Fannie Mae or Freddie Mac.
2.Your current mortgage must have a securitization date prior to June 1, 2009

If you meet these two criteria, you may be HARP-Eligible. If your mortgage is FHA, USDA or a jumbo mortgage, you are not HARP-Eligible. However there are some new programs available that may help you and for those you’ll need to contact me directly at 314 628-2255.

HARP: Q/A

How do I know if Fannie Mae or Freddie Mac has my mortgage?

Fannie Mae and Freddie Mac have “look up” forms on their respective websites. Look to your left of this page under the government links tab and click on either Fannie Mae or Freddie Mac.

If my mortgage is held by Fannie Mae or Freddie Mac, am I instantly-eligible for the Home Affordable Refinance Program?

No unfortunately and it shouldn’t come as a surprise but the banks are not all going to play ball or for that matter make it easy for you to save money. Having your mortgage held by Fannie or Freddie is just the pre-qualifier.

My mortgage is held by Fannie/Freddie. Now what do I do?

Well that’s good news and often times when I pull your credit under your current mortgage/bank who you make your payments to it will indicate whether your loan is owned by Fannie Mae or Freddie Mac.

My mortgage is backed by Wells Fargo. Am I eligible for HARP?

It’s possible that your mortgage is backed by Wells Fargo, but the more likely answer is that Wells Fargo is just your mortgage servicer; the bank that collects your payments. Wells Fargo backs very few of its own loans. Most loans for which payments are sent to Wells Fargo are backed by either Fannie Mae or Freddie Mac. Double-check with Fannie Mae and Freddie Mac before assuming Wells Fargo backs your loan.

My mortgage is backed by Bank of America. Am I eligible for HARP?

Bank of America does back some of its own loans, but the more likely answer is that Bank of America is your mortgage servicer; the bank that collects your monthly mortgage payments. Bank of America whom is probably the closest thing to a legal version of the American Mafia actually owns very few of its own loans. For most loans for which payments are sent to Bank of America, Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae and Freddie Mac to make sure Bank of America doesn’t hold your loan.

My mortgage is backed by Chase. Am I eligible for HARP?

There is a chance that Chase backs your loan, but what’s more likely is that Chase is just your mortgage servicer; the bank that collects your payments each month. Chase backs very few of its own loans. For most loans for which payments are sent to Chase, you’ll find that Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae’s and Freddie Mac’s websites to make sure your loan is not held by Chase.

What if neither Fannie Mae nor Freddie Mac has a record of my mortgage?

If neither Fannie nor Freddie has record of your mortgage, your loan is HARP-ineligible. However, you may still be eligible for a “regular” refinance to lower rates. Or, if your mortgage is insured by the FHA, use the FHA Streamline Refinance Program which should help you lower your interest rate. The FHA Streamline Refinance can still help underwater homeowners only not as much as it could and should. But that’s another bureaucratic topic that I’m sure I’ll tell you about if that’s the route you need to go.

Does HARP work the same with Fannie Mae as with Freddie Mac?

Yes, for the most part, the HARP mortgage program is the same with Fannie Mae as with Freddie Mac. There are some small differences, but they affect just a tiny, tiny portion of the general population. For everyone else, the guidelines work the same.

Am I eligible for the Home Affordable Refinance Program if I’m behind on my mortgage?

No, this is only if you are current on your mortgage.

What are the HARP program’s mortgage rates?

Mortgage rates for the HARP mortgage program are the same as for a “traditional” refinance. There is no “premium” for using the HARP program but then again can and may also depend on what the banks feel like doing.

Will the Home Affordable Refinance Program help me avoid foreclosure?

Unfortunately not and if you’re facing foreclosure or behind in your payments you should try and deal with your lender directly, which can be a very long and frustrating process and if you need some advice or know someone who’s in this position please don’t hesitate to call me directly at 314 628-2255 or email me at nav@usa-mortgage.com.

What are the minimum requirements to be HARP-eligible?

First, your home loan must be paid on-time for the prior 6 months, and at least 11 of the most recent 12 months. Second, your mortgage must have been sold to Fannie or Freddie prior to June 1, 2009. And, third, you may not have used the HARP mortgage program before only one HARP refinance per mortgage is allowed.

My mortgage was securitized shortly after the HARP deadline of May 31, 2009. Can I get a waiver or exception?

Seems unfair considering how interest rates have decreased and initially when the HARP program was available the banks made it very difficult to qualify and get approved and even after that you were having pricing adjustments whether you realize it or not to your interest rate where you were not qualifying for the same interest rates, let’s just say it wasn’t a level playing field that the banks had set up. If your loan was not securitized on, or before, May 31, 2009, you cannot use HARP.

If I refinanced with HARP a few years ago, can I use it again for HARP II?

No. You can only use the HARP mortgage program one time per home.
I refinanced into a HARP loan a few years ago, but my bank never told me it was a HARP loan. I feel like I was lied to.

Can I use HARP again under the HARP II program?

No. You can only use the HARP mortgage program one time per home.

Is there a loan-to-value restriction for HARP?

There shouldn’t be but again banks have interpreted the rules the way they want to yet again ensure they are in my opinion not helping you out to much, making it as easy as it should be to lower your interest rate and save money. Technically though all homes regardless of how far underwater they are are eligible for the HARP program.

I am really far underwater on my mortgage. Can I use HARP?

Yes, you can. There is no loan-to-value restriction under the HARP mortgage program so long as your new mortgage is a fixed rate loan with a term of 30 years or fewer. If you use an adjustable-rate mortgage, your loan-to-value is capped at 105%.

Maybe I wasn’t clear and I’ve been told I can’t be helped numerous times and I am really, really far underwater on my mortgage. Are you sure I can use HARP?

Yes, I am sure. The new HARP mortgage program specifically has no loan-to-value restriction so that homeowners in Florida, California, Arizona and Nevada can take advantage of it. You can 300% loan-to-value, and still be HARP-eligible. HARP is now unlimited LTV for fixed rate loans with 30-year terms or less. So you had better call me fast before something changes and you become ineligible.

If I refinance with HARP using an ARM, do I still get “unlimited LTV”?

No, if you use an ARM for HARP, you are limited to 105% loan-to-value. Only fixed rate loans get the unlimited LTV treatment.

Will my home require an appraisal with the HARP mortgage program?

Your chances for not needing an appraisal are better if your loan is currently through Freddie Mac. Although your home’s value doesn’t matter for the HARP mortgage program, lenders will run what’s called an “automated valuation model” (AVM) on your home. If the value meets reliability standards, no physical appraisal will be required. However, your lender may choose to commission a physical appraisal anyway just to make sure your home is “standing”.

Is HARP the same thing as an FHA Streamline Refinance?

No, the HARP mortgage program is administered through Fannie Mae and Freddie Mac. FHA Streamline Refinances are performed through the FHA. The programs have similarities, however.

I have an FHA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for an FHA loan. If your current mortgage is backed by the FHA, and your home is underwater, use the FHA Streamline Refinance program.

I have a VA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for a VA loan. If your current mortgage is backed by the VA, and your home is underwater, use the VA’s IRRRL program.

Does Ginnie Mae participate in the HARP Refinance program?

No, Ginnie Mae does not participate in the HARP Refinance program. Ginnie Mae is associated with FHA mortgages not conventional ones. HARP II is for conventional mortgages only.

Do I have to HARP refinance with my current mortgage lender?

Technically no and once again remember the banks still like to play by their own rules.

So, I can use any mortgage lender for my HARP Refinance?

Yes, with the Home Affordable Refinance Program, you can refinance with any participating HARP lender which some will be more willing than others to actually help and improve your situation and for those most eagerly working on the HARP programs call me and I’ll find a suitable home or lender in order for you to take advantage of the lower interest rates.

My current bank says that they’re the only ones who can do my HARP Refinance. Is that true?

No, that’s not true, or at least it shouldn’t be. There are very few instances in which a HARP applicant will be precluded from shopping for the best rate or to be able to get away from your current mortgage company.

My current mortgage is with [YOUR BANK HERE] and I don’t like them. Can I work with another bank?

Yes, and many of you hate your current bank/mortgage company and this does give you the opportunity of hopefully getting away from them.

I put down 20% when I bought my home. My home is now underwater. If I refinance with HARP, will I have to pay mortgage insurance now?

No, you won’t need to pay mortgage insurance. If your current loan doesn’t require PMI, your new loan won’t require it, either.

I pay PMI now. Will my PMI payments go up with a new HARP refinance?

No, your private mortgage insurance payments will not increase. However, the “transfer” of your mortgage insurance policy may require an extra step. Remind your lender that you’re paying PMI to help the refinance process move more smoothly.

My bank says I can’t refinance with HARP 2.0 because I have PMI. Is that true?

No, it’s not true that used to be the case but now you can refinance through HARP 2.0 even if your current mortgage has private mortgage insurance.

Why does my loan officer tell me I can’t refinance with HARP because my current mortgage has PMI?

Well there is something to be said for making sure the person you’re dealing with really knows what they are talking about and not just settling for someone that can’t give you a straight answer.

My current mortgage has Lender-Paid Mortgage Insurance (LPMI). Can I refinance via HARP?

Often times you may not even know that you have LPMI (lender paid mortgage insurance) and yes, you can refinance your mortgage via HARP 2.0 if your current loan has lender-paid mortgage insurance. Your new loan will be required to carry at minimum, the same amount of coverage.

I have no idea what that means. How do I choose my PMI “coverage” when I refinance a HARP loan that has LPMI?

Don’t worry about it, I will handle it just make sure to disclose that your mortgage has LPMI.

How do I know if my mortgage has Lender-Paid Mortgage Insurance (LPMI)?

To find out if your mortgage has lender-paid mortgage insurance (LPMI), locate your loan paperwork from closing. There should be a clear disclosure that states that your mortgage features LPMI, and the terms should be clearly labeled for you.

I don’t see an LPMI disclosure in my closing package but I think that I have it. How do I know if my mortgage has LPMI?

If there is no LPMI disclosure, first check if your first mortgage’s loan-to-value exceeded 80% at the time of closing. If it did, look to see if you are paying monthly mortgage insurance. If you are not paying monthly PMI, you’re likely carrying LPMI.

What’s the bottom line with HARP refinances and mortgage insurance?

With HARP, regardless of whether you have borrower-paid mortgage insurance (BPMI) or lender-paid mortgage insurance (LPMI), a refinance is possible. The key is that the new loan has mortgage insurance coverage at least equal to the mortgage insurance coverage on your current mortgage.

What if my lender won’t give me a HARP refinance because I have mortgage insurance?

Time to stop dealing with them and call me, remember it isn’t in the bank’s interest to help save you money.

What’s the biggest mortgage I can get with a HARP refinance?

HARP refinances are limited to your area’s conforming loan limits. In most cities, the conforming loan limit is $417,000. However, there are some cities in which conforming loan limits are as high at $625,500.

Can I do a cash-out refinances with HARP?

No, the HARP mortgage program doesn’t allow cash out refinance. Only rate-and-term refinances are allowable.

Can I refinance a second/vacation home with HARP?

Yes, you can refinance a second/vacation property with HARP, even if the home was once your primary residence. The loan must meet typical program eligibility standards.

Can I refinance an investment/rental property with HARP?

Yes, you can refinance an investment/rental property with HARP, even if the home was once your primary residence. You can refinance a home on which you’re an “accidental landlord” via HARP. The loan must meet typical program eligibility standards.

I rent out my old home. Is it HARP Eligible even though it’s an investment property now?

Yes, you can use the HARP Refinance program for your former residence even if there’s a renter there now.

How long do I have to stay in my house if I use HARP on my primary residence?

There is no specific time frame for which you’re required to stay in your home if you use HARP 2.0. Just like any other mortgage, if you plan to stay in your home after closing, it’s your primary residence. If you plan to turn it into a rental, it’s an investment property.

These things I’m reading here… Why, when I call my bank, do they tell me it’s not true?

It’s possible that the call center representative to whom you’re speaking is neither knowledgeable about HARP, nor the actual mortgage underwriting process. This post is researched and cross-referenced against Fannie Mae and Freddie Mac guidelines, and publicly-available reports from the FHFA.

Are condominiums eligible for HARP refinancing?

Yes, condominiums can be financed on the HARP refinance program
.
Can I consolidate mortgages with a HARP refinance?

No, you cannot consolidate multiple mortgages with the HARP refinance program. It’s for first liens only and your second mortgage won’t be owned by Fannie Mae or Freddie Mac. All 2nd mortgages and subordinate/junior liens must be re subordinated to the new first mortgage.

My bank is not setup for HARP and I want to refinance. What do I do?

If your current bank is not setup for HARP you had better call me 314 628-2255.

Can I “roll up” my closing costs with a HARP refinance?

Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash. In no cases may loan sizes exceed the local conforming loan limits, however.

I am out of work, unemployed, and without income. Am I HARP-eligible?

Yes, you do not need to be employed to use the HARP mortgage program. HARP applicants do not need to requalify unless their new principal & interest payment increases by more than 20%. If the new payment increases by less than 20%, or falls, there is no requalification necessary.

My original mortgage was a stated income loan. Will my income be verified with a HARP refinance?

No, your income will not be verified via the HARP refinance program unless your new principal & interest payment increases by more than 20 percent. If you’re new principal & interest payment increases by less than 20%, or falls, there is no income verification necessary.

What is the maximum income that a HARP applicant is allowed?

The HARP refinance program has no maximum income limits. You cannot “earn too much” to qualify.

So, I can’t earn too much money to use HARP 2.0?

No, there are no income restrictions for the Home Affordable Refinance Program (HARP). A similar-sounding program, though — Home Affordable Modification Program (HAMP) does have income limitations. Many people confuse the two.

Is HARP the same thing as HAMP?

Nope, HARP stands for Home Affordable Refinance Program. HAMP stands for Home Affordable Modification Program. Both programs are supported by the Making Home Affordable initiative.

I am now divorced. I want to remove my ex-spouse from the mortgage. Can I do that with HARP?

Yes. With HARP, a borrower on the mortgage can be removed via a HARP refinance so long as that person is also removed from the deed; and has no ownership interest in the home.

Is there a minimum credit score to use the HARP program?

No, there is no minimum credit score requirement with the HARP mortgage program, per se. However, you must qualify for the mortgage based on traditional underwriting standards.

My current lender tells me that if I want to do a HARP refinance, I have to go through him. Is that true?

No, that’s not true at all in fact if they were going to willingly put you in a better position on their own they would have already done it. It may be better to try and get away from your current lender/bank and send your money elsewhere that is more willing to save you some money.

My bank called me for a HARP refinance. The rate seems high. Should I shop around?

Yes, and I can’t stress this enough that it’s not in the banks best interest to put you in a better position and save you money. They already have your business and have no incentive to save you any money and unfortunately even if they’ll lose your business. Have any of their actions show that they care about the guy that always pays their bills on time? Trust me they won’t change their feathers and you can bet that not going directly through your current lender/bank will land you a better deal and getting done faster and smoother than dealing with the bank directly. Not many banks have expertise with a new refinance program such as HARP and the last thing you want is to have your loan approval fall apart two-three months into a process because your lender failed to underwrite to HARP mortgage standards.

What are the costs to refinance via the HARP program?

Closing costs for HARP refinances should be no different than for any other mortgage. You may pay points, you may pay closing costs, and you may pay neither. How your mortgage rate and loan fees are structured is between you and your loan officer. You can even opt for a zero-cost HARP refinance. Call and ask me about your varying options 314 628-2255.

When does the HARP program end?

If you are HARP-eligible, you must close on your mortgage prior to January 1, 2014. But I wouldn’t be surprised if that changes or guidelines get stricter so I wouldn’t delay jumping this band wagon if you qualify now.


Any other questions or concerns call 314 628-2255 or email me at nav@usa-mortgage.com

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Feb

10

January Housing Scorecard

February 10, 2012 | Housing  |  Leave a Comment

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the January edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the January Housing Scorecard underscore fragility as the overall outlook remains mixed. Inventories of existing homes for sale and the overhang of homes held off market improved over the last two quarters and foreclosure starts continued to fall in December. However, data on new home sales and home prices offered mixed signals, while foreclosure completions ticked upward. The full report is available online at www.hud.gov/scorecard.

“While we should be encouraged by the positive trends on inventories and foreclosure starts, the mixed overall outlook means that we must remain diligent to improve conditions in the nation’s housing market,” said HUD Assistant Secretary Raphael Bostic. “Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief. That’s why the Administration’s recent proposals are critical to promoting healing in the market. Our efforts to ramp up economic development in fragile neighborhoods and to expand homeowner access to low-interest refinance options reflect our commitment to turning these markets towards growth.”

“The Administration’s programs continue to offer real relief for homeowners while setting standards that have led to more sustainable assistance to prevent foreclosures” said Treasury Assistant Secretary for Financial Stability Tim Massad. “The recent enhancements we have announced will bring further assistance to homeowners, renters and their communities as our nation continues to heal from an unprecedented housing crisis.”

On January 27, the Obama Administration announced important enhancements to the Home Affordable Modification Program (HAMP) to extend the reach of the program, broaden the pool of eligible homeowners, protect tenants at risk of displacement due to foreclosure and provide more robust relief to underwater homeowners who participate in the program. And just last week, the President unveiled a broad plan to provide responsible borrowers an opportunity to refinance, implement a Homeowner’s Bill of Rights, and begin to transition foreclosed properties into rental housing, helping to stabilize neighborhoods and improve home prices.

The January Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:

Market data show progress on housing overhang, but continued fragility in home prices and sales. Inventories of existing homes for sale have continued to improve over the last two quarters, declining from 3.2 million in the second quarter to 2.4 million in the fourth quarter. Housing units held off the market have also fallen, from 3.9 million in the first quarter to 3.6 million in the fourth quarter. Existing home sales continued to increase this month, while new home sales declined. In addition, foreclosure starts continued to fall in December, though foreclosure completions ticked upward.

The Administration’s recovery efforts continue to help millions of families deal with the worst economic crisis since the Great Depression. More than 5.6 million modification arrangements were started between April 2009 and the end of December 2011 – including more than 1.7 million HAMP trial modification starts and nearly 1.2 million FHA loss mitigation and early delinquency interventions. More than 930,000 homeowners have received a HAMP permanent modification to date, saving an estimated $10.5 billion in monthly mortgage payments. The Administration’s programs continue to encourage improved standards and processes in the industry, with HOPE Now lenders offering families and individuals more than 2.6 million proprietary mortgage modifications through December.

Eligible homeowners entering HAMP have a high likelihood of earning a permanent modification and realizing long-term success. Eighty-four percent of homeowners entering HAMP in the past 18 months received a permanent modification, with an average trial period of 3.5 months. Quarterly re-default data shows that HAMP modifications are sustainable for the majority of homeowners. After six months in the program, more than 94 percent of homeowners remain in their permanent modification. HAMP modifications continue to show lower re-default rates than industry modifications.

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Feb

9

Tax Day Delayed TWO Extra Days This Year!!

February 9, 2012 | Government  |  Leave a Comment

For the Third Time in the past Seven Years, Federal Income Taxes will NOT be due April 15th. Because of a combination of the calendar, a holiday, and tax law, Tax Day this yea will be delayed until Tuesday, April 17.

Here’s why

First, April 15 is a Sunday and we all know the government is closed on Sundays. This means that that taxes can’t be filed on April 15, as regularly scheduled. Rather, the tax due date should roll over to the first available business day — Monday.

However, Monday, April 16 is Emancipation Day, a holiday in the District of Columbia since 2005. What in the world is Emancipation Day is what I’m thinking yet another holiday for the Federal Government.

Emancipation Day honors President Abraham Lincoln’s April 16, 1862 signing of the Compensation Emancipation Act. All of Washington, D.C. is closed for the local holiday — including the offices of the IRS. Taxes can’t be due on this date because there will be nobody at the Internal Revenue Service to receive them.

Hence the next available business day is Tuesday, April 17. However for those of you who are procrastinators out there, who always seem to find a way to need to file the extension will still have to file by October 15th 2012.

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Feb

3

President Obama’s Plan to Help Responsible Homeowners and Heal the Housing Market

February 3, 2012 | Government  |  Leave a Comment

In his State of the Union address, President Obama laid out a Blueprint for an America Built to Last, calling for action to help responsible borrowers and support a housing market recovery. While the government cannot fix the housing market on its own, the President believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference, including allowing these homeowners to save thousands of dollars by refinancing at today’s low interest rates. That’s why the President is putting forward a plan that uses the broad range of tools to help homeowners, supporting middle-class families and the economy.

Key Aspects of the President’s Plan

• Broad Based Refinancing to Help Responsible Borrowers Save an Average of $3,000 per Year: The President’s plan will provide borrowers who are current on their payments with an opportunity to refinance and take advantage of historically low interest rates, cutting through the red tape that prevents these borrowers from saving hundreds of dollars a month and thousands of dollars a year. This plan, which is paid for by a financial fee so that it does not add a dime to the deficit, will:

o Provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria.
o Streamline the refinancing process for all GSE borrowers who are current on their loans.
o Give borrowers the chance to rebuild equity through refinancing.

• Homeowner Bill of Rights: The President is putting forward a single set of standards to make sure borrowers and lenders play by the same rules, including:

o Access to a simple mortgage disclosure form, so borrowers understand the loans they are taking out.
o Full disclosure of fees and penalties.
o Guidelines to prevent conflicts of interest that end up hurting homeowners.
o Support to keep responsible families in their homes and out of foreclosure.
o Protection for families against inappropriate foreclosure, including right of appeal.

• First Pilot Sale to Transition Foreclosed Property into Rental Housing to Help Stabilize Neighborhoods and Improve Home Prices: The FHFA, in conjunction with Treasury and HUD, is announcing a pilot sale of foreclosed properties to be transitioned into rental housing.

• Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work: Following the Administration’s lead, major banks and the GSEs are now providing up to 12 months of forbearance to unemployed borrowers.

• Pursuing a Joint Investigation into Mortgage Origination and Servicing Abuses: This effort marshals new resources to investigate misconduct that contributed to the financial crisis under the leadership of federal and state co-chairs.

• Rehabilitating Neighborhoods and Reducing Foreclosures: In addition to the steps outlined above, the Administration is expanding eligibility for HAMP to reduce additional foreclosures, increasing incentives for modifications that help borrowers rebuild equity, and is proposing to put people back to work rehabilitating neighborhoods through Project Rebuild.

1. Broad Based Refinancing Plan

Millions of homeowners who are current on their mortgages and could benefit from today’s low interest rates face substantial barriers to refinancing through no fault of their own. Sometimes homeowners with good credit and clean payment histories are rejected because their mortgages are underwater. In other cases, they are rejected because the banks are worried that they will be left taking losses, even where Fannie Mae or Freddie Mac insure these new mortgages. In the end, these responsible homeowners are stuck paying higher interest rates, costing them thousands of dollars a year.

To address this challenge, the President worked with housing regulators this fall to take action without Congress to make millions of Americans eligible for lower interest rates. However, there are still millions of responsible Americans who continue to face steep barriers to low-cost, streamlined refinancing. So the President is now calling on Congress to open up opportunities to refinancing for responsible borrowers who are current on their payments.

Under the proposal, borrowers with loans insured by Fannie Mae or Freddie Mac (i.e. GSE-insured loans) will have access to streamlined refinancing through the GSEs. Borrowers with standard non-GSE loans will have access to refinancing through a new program run through the FHA. For responsible borrowers, there will be no more barriers and no more excuses.

Key components of the President’s plan include:

• Providing Non-GSE Borrowers Access to Simple, Low-Cost Refinancing: President Obama is calling on Congress to pass legislation to establish a streamlined refinancing program. The refinancing program will be open to all non-GSE borrowers with standard (non-jumbo) loans who have been keeping up with their mortgage payments. The program will be operated through the FHA.

Simple and straightforward eligibility criteria: Any borrower with a loan that is not currently guaranteed by the GSEs can qualify if they meet the following criteria:

• They are current on their mortgage: Borrowers will need to have been current on their loan for the past 6 months and have missed no more than one payment in the 6 months prior.
• They meet a minimum credit score. Borrowers must have a current FICO score of 580 to be eligible. Approximately 9 in 10 borrowers have a credit score adequate to meet that requirement.
• They have a loan that is no larger than the current FHA conforming loan limits in their area: Currently, FHA limits vary geographically with the median area home price – set at $271,050 in lowest cost areas and as high as $729,750 in the highest cost areas
• The loan they are refinancing is for a single family, owner-occupied principal residence. This will ensure that the program is focused on responsible homeowners trying to stay in their homes.

Streamlined application process: Borrowers will apply through a streamlined process designed to make it simpler and less expensive for borrowers and lenders to refinance. Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed. (Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, a lender will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.)

Program parameters to reduce program cost: The President’s plan includes additional steps to reduce program costs, including:

• Establishing loan-to-value limits for these loans. The Administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify. This would reduce the risk associated with the program and relieve the strain of negative equity on the borrower.
• Creating a separate fund for new streamlined refinancing program. This will help the FHA better track and manage the risk involved and ensure that it has no effect on the operation of the existing Mutual Mortgage Insurance (MMI) fund.

EXAMPLE: How Refinancing Can Benefit a Borrower With a Non-GSE Loan

 A borrower has a non-GSE mortgage originated in 2005 with a 6 percent rate and an initial balance of $300,000 – resulting in monthly payments of about $1,800.

 The outstanding balance is now about $272,000 and the borrower’s home is now worth $225,000, leaving the borrower underwater (with a loan-to-value ratio of about 120%).

 Though the borrower has been paying his mortgage on time, he cannot refinance at today’s historically low rates.

 Under the President’s legislative plan, the borrower would be eligible to refinance into a 4.25% percent 30-year loan, which would reduce monthly payments by about $460 a month.

• Refinancing Plan Will Be Fully Paid For By a Portion of Fee on Largest Financial Institutions: The Administration estimates the cost of its refinancing plan will be in the range of $5 to $10 billion, depending on exact parameters and take-up. This cost will be fully offset by using a portion of the President’s proposed Financial Crisis Responsibility Fee, which imposes a fee on the largest financial institutions based on their size and the riskiness of their activities – ensuring that the program does not add a dime to the deficit.

• Fully Streamlining Refinancing for All GSE Borrowers: The Administration has worked with the FHFA to streamline the GSEs’ refinancing program for all responsible, current GSE borrowers. The FHFA has made important progress to-date, including eliminating the restriction on allowing deeply underwater borrowers to access refinancing, lowering fees associated with refinancing, and making it easier to access refinancing with lower closing costs.

To build on this progress, the Administration is calling on Congress to enact additional changes that will benefit homeowners and save taxpayers money by reducing the number of defaults on GSE loans. We believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the Administration is calling on Congress to do what is in the taxpayer’s interest, by:

a. Eliminating appraisal costs for all borrowers: Borrowers who happen to live in communities without a significant number of recent home sales often have to get a manual appraisal to determine whether they are eligible for refinancing into a GSE guaranteed loan, even under the HARP program. Under the Administration’s proposal, the GSEs would be directed to use mark-to-market accounting or other alternatives to manual appraisals for any loans for which the loan-to-value cannot be determined with the GSE’s Automated Valuation Model. This will eliminate a significant barrier that will reduce cost and time for borrowers and lenders alike.

b. Increasing competition so borrowers get the best possible deal: Today, lenders looking to compete with the current servicer of a borrower’s loan for that borrower’s refinancing business continue to face barriers to participating in HARP. This lack of competition means higher prices and less favorable terms for the borrower. The President’s legislative plan would direct the GSEs to require the same streamlined underwriting for new servicers as they do for current servicers, leveling the playing field and unlocking competition between banks for borrowers’ business.

c. Extending streamlined refinancing for all GSE borrowers: The President’s plan would extend these steps to streamline refinancing for homeowners to all GSE borrowers. Those who have significant equity in their home – and thus present less credit risk – should benefit fully from all streamlining, including lower fees and fewer barriers. This will allow more borrowers to take advantage of a program that provides streamlined, low-cost access to today’s low interest rates – and make it easier and more automatic for servicers to market and promote this program for all GSE borrowers.

• Giving Borrowers the Chance to Rebuild Equity in their Homes Through Refinancing: All underwater borrowers who decide to participate in either HARP or the refinancing program through the FHA outlined above will have a choice: they can take the benefit of the reduced interest rate in the form of lower monthly payments, or they can apply that savings to rebuilding equity in their homes. The latter course, when combined with a shorter loan term of 20 years, will give the majority of underwater borrowers the chance to get back above water within five years, or less.

To encourage borrowers to make the decision to rebuild equity in their homes, we are proposing that the legislation provide for the GSEs and FHA to cover the closing costs of borrowers who chose this option – a benefit averaging about $3,000 per homeowner. To be eligible, a participant in either program must agree to refinance into a loan with a no more than 20 year term with monthly payments roughly equal to those they make under their current loan. For those who agree to these terms, the lender will receive payment for all closing costs directly from the GSEs or the FHA, depending on the entity involved.

EXAMPLE: How Rebuilding Equity Can Benefit a Borrower

 A borrower has a 6.5 percent $214,000 30-year mortgage originated in 2006. It now has an outstanding balance of $200,000, but the house is worth $160,000 (a loan-to-value ratio of 125). The monthly payment on this mortgage is $1,350.

 While this borrower is responsibly paying her monthly mortgage, she is locked out of refinancing.

 By refinancing into a 4.25 percent 30-year mortgage loan, this borrower will reduce her monthly payment by $370. However, after five years her mortgage balance will remain at $182,000.

 Under the rebuilding equity program, the borrower would refinance into a 20-year mortgage at 3.75 percent and commit her monthly savings to paying down principal. After five years, her mortgage balance would decline to $152,000, bringing the borrower above water.

 If the borrower took this option, the GSEs or FHA would also cover her closing costs – potentially saving her about $3,000.

• Streamlined Refinancing for Rural America: The Agriculture Department, which supports mortgage financing for thousands of rural families a year, is taking steps to further streamline its USDA-to-USDA refinancing program. This program is designed to provide those who currently have loans insured by the Department of Agriculture with a low-cost, streamlined process for refinancing into today’s low rates. The Administration is announcing that the Agriculture Department will further streamline this program by eliminating the requirement for a new appraisal, a new credit report and other documentation normally required in a refinancing. To be eligible, a borrower need only demonstrate that he or she has been current on their loan.

• Streamlined Refinancing for FHA Borrowers: Like the Agriculture Department, the Federal Housing Authority is taking steps to make it easier for borrowers with loans insured by their agency to obtain access to low-cost, streamlined refinancing. The current FHA-to-FHA streamlined refinance program allows FHA borrowers who are current on their mortgage to refinance into a new FHA-insured loan at today’s lower interest rates without requiring a full re-underwrite of the loan, thereby providing a simple way for borrowers to reduce their mortgage payments.

However, some borrowers who would be eligible for low-cost refinancing through this program are being denied by lenders reticent to make loans that may compromise their status as FHA-approved lenders. To resolve this issue, the FHA is removing these loans from their “Compare Ratio”, the process by which the performance of these lenders is reviewed. This will open the program up to many more families with FHA-insured loans.

2. Homeowner Bill of Rights

The Administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards As we have learned over the past few years, the nation is not well served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors. The Administration believes that there should be one set of rules that borrowers and lenders alike can follow. A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.

The Administration will therefore work closely with regulators, Congress and stakeholders to create a more robust and comprehensive set of rules that better serves borrowers, investors, and the overall housing market. These rules will be driven by the following set of core principles:

• Simple, Easy to Understand Mortgage Forms: Every prospective homeowner should have access to clear, straightforward forms that help inform rather than confuse them when making what is for most families their most consequential financial purchase. To help fulfill this objective, the Consumer Financial Protection Bureau (CFPB) is in the process of developing a simple mortgage disclosure form to be used in all home loans, replacing overlapping and complex forms that include hidden clauses and opaque terms that families cannot understand.

• No Hidden Fees and Penalties: Servicers must disclose to homeowners all known fees and penalties in a timely manner and in understandable language, with any changes disclosed before they go into effect.

• No Conflicts of Interest: Servicers and investors must implement standards that minimize conflicts of interest and facilitate coordination and communication, including those between multiple investors and junior lien holders, such that loss mitigation efforts are not hindered for borrowers.

• Assistance For At-Risk Homeowners:

o Early Intervention: Servicers must make reasonable efforts to contact every homeowner who has either demonstrated hardship or fallen delinquent and provide them with a comprehensive set of options to help them avoid foreclosure. Every such homeowner must be given a reasonable time to apply for a modification.

o Continuity of Contact: Servicers must provide all homeowners who have requested assistance or fallen delinquent on their mortgage with access to a customer service employee with 1) a complete record of previous communications with that homeowner; 2) access to all documentation and payments submitted by the homeowner; and 3) access to personnel with decision-making authority on loss mitigation options.

o Time and Options to Avoid Foreclosure: Servicers must not initiate a foreclosure action unless they are unable to establish contact with the homeowner after reasonable efforts, or the homeowner has shown a clear inability or lack of interest in pursuing alternatives to foreclosure. Any foreclosure action already under way must stop prior to sale once the servicer has received the required documentation and cannot be restarted unless and until the homeowner fails to complete an application for a modification within a reasonable period, their application for a modification has been denied or the homeowner fails to comply with the terms of the modification received.

• Safeguards Against Inappropriate Foreclosure

o Right of Appeal: Servicers must explain to all homeowners any decision to take action based on a failure by the homeowner to meet their payment obligations and provide a reasonable opportunity to appeal that decision in a formal review process.
o Certification of Proper Process: Prior to a foreclosure sale, servicers must certify in writing to the foreclosure attorney or trustee that appropriate loss mitigation alternatives have been considered and that proceeding to foreclosure sale is consistent with applicable law. A copy of this certification must be provided to the borrower.

The agencies of the executive branch with oversight or other authority over servicing practices –the FHA, the USDA, the VA, and Treasury, through the HAMP program – will each take the steps needed in the coming months to implement rules for their programs that are consistent with these standards.

3. Announcement of Initial Pilot Sale in Initiative to Transition Real Estate Owned (REO) Property to Rental Housing to Stabilize Neighborhoods and Improve Housing Prices

When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery. As part of the Administration’s effort to help lay the foundation for a stronger housing recovery, the Department of Treasury and HUD have been working with the FHFA on a strategy to transition REO properties into rental housing. Repurposing foreclosed and vacant homes will reduce the inventory of unsold homes, help stabilize housing prices, support neighborhoods, and provide sustainable rental housing for American families.

Today, the FHFA is announcing the first major pilot sale of foreclosed properties into rental housing. This marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties, easing the pressure of these distressed properties on communities and the housing market.

4. Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work

Last summer, the Administration announced that it was extending the minimum forbearance period that unemployed borrowers in FHA and HAMP would receive on their mortgages to a full year, up from four months in FHA and three months in HAMP. This forbearance period allows borrowers to stay in their homes while they look for jobs, which gives these families a better chance of avoiding default and helps the housing market by reducing the number of foreclosures. Extending this period makes good economic sense as the time it takes the average unemployed American to find work has grown through the course of the housing crisis: nearly 60 percent of unemployed Americans are now out of work for more than four months.
These extensions went into effect for HAMP and the FHA in October. Today the Administration is announcing that the market has followed our lead, finally giving millions of families the time needed to find work before going into default.

• 12-Month Forbearance for Mortgages Owned by the GSEs: Fannie Mae and Freddie Mac have both announced that lenders servicing their loans can provide up to a year of forbearance for unemployed borrowers, up from 3 months. Between them, Fannie and Freddie cover nearly half of the market, so this alone will extend the relief available for a considerable portion of the nation’s unemployed homeowners.

• Move by Major Servicers to Use 12-Month Forbearance as Default Approach: Key servicers have also followed the Administration’s lead in extending forbearance for the unemployed to a year. Wells Fargo and Bank of America, two of the nation’s largest lenders, have begun to offer this longer period to customers whose loans they hold on their own books, recognizing that it is not just helpful for these struggling families, but it makes good economic sense for their lenders as well.

• A New Industry Norm: With these steps, the industry is gradually moving to a norm of providing 12 months of forbearance for those looking for work. This is a significant shift worthy of note, as only a few months ago unemployed borrowers simply were not being given a fighting chance to find work before being faced with the added burden of a monthly mortgage payment.

5. Joint Investigation into Mortgage Origination and Servicing Abuses

The Department of Justice, the Department of Housing and Urban Development, the Securities and Exchange Commission and state Attorneys General have formed a Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force that will be responsible for investigating misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The Department of Justice has announced that this working group will consist of at least 55 DOJ attorneys, analysts, agents and investigators from around the country, joining existing state and federal resources investigating similar misconduct under those authorities.

The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ. The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level. Other state Attorneys General have been and will be joining this effort.

6. Putting People Back to Work Rehabilitating Homes, Businesses and Communities Through Project Rebuild

Consistent with a proposal he first put forward in the American Jobs Act, the President will propose in his Budget to invest $15 billion in a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Building on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures – including those piloted through the Neighborhood Stabilization Program – Project Rebuild will bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks.

In addition, the Budget will provide $1 billion in mandatory funding in 2013 for the Housing Trust Fund to finance the development, rehabilitation and preservation of affordable housing for extremely low income families. These approaches will not only create construction jobs but will help reduce blight and crime and stabilize housing prices in areas hardest hit by the housing crisis.

7. Expanding HAMP Eligibility to Reduce Additional Foreclosures and Help Stabilize Neighborhoods

To date, the Home Affordable Mortgage Program (HAMP) has helped more than 900,000 families permanently modify their loans, providing them with savings of about $500 a month on average. Combined with measures taken by the FHA and private sector modifications, public and private efforts have helped more than 4.6 million Americans get mortgage aid to prevent avoidable foreclosures. Along with extending the HAMP program by one year to December 31, 2013, the Administration is expanding the eligibility for the program so that it reaches a broader pool of distressed borrowers. Additional borrowers will now have an opportunity to receive modification assistance that provides the same homeowner protections and clear rules for servicers established by HAMP. This includes:

• Ensuring that Borrowers Struggling to Make Ends Meet Because of Debt Beyond Their Mortgage Can Participate in the Program: To date, if a borrower’s first-lien mortgage debt-to-income ratio is below 31% they are ineligible for a HAMP modification. Yet many homeowners who have an affordable first mortgage payment – below that 31% threshold – still struggle beneath the weight of other debt such as second liens and medical bills. Therefore, we are expanding the program to those who struggle with this secondary debt by offering an alternative evaluation opportunity with more flexible debt-to-income criteria.

• Preventing Additional Foreclosures to Support Renters and Stabilize Communities: We will also expand eligibility to include properties that are currently occupied by a tenant or which the borrower intends to rent. This will provide critical relief to both renters and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties. Single-family homes are an important source of affordable rental housing, and foreclosure of non-owner occupied homes has disproportionate negative effects on low-and moderate-income renters.

8. Increasing Incentives for Modifications that Help Borrowers Rebuild Equity
Currently, HAMP includes an option for servicers to provide homeowners with a modification that includes a write-down of the borrower’s principal balance when a borrower owes significantly more on their mortgage than their home is worth. These principal reduction modifications help both reduce a borrower’s monthly payment and rebuild equity in their homes. While not appropriate in all circumstances, principal reduction modifications are an important tool in the overall effort to help homeowners achieve affordable and sustainable mortgages. To further encourage investors to consider or expand use of principal reduction modifications, the Administration will:

o Triple the Incentives Provided to Encourage the Reduction of Principal for Underwater Borrowers: To date, the owner of a loan that qualifies for HAMP receives between 6 and 21 cents on the dollar to write down principal on that loan, depending on the degree of change in the loan-to-value ratio. To increase the amount of principal that is written down, Treasury will triple those incentives, paying from 18 to 63 cents on the dollar.

o Offer Principal Reduction Incentives for Loans Insured or Owned by the GSEs: HAMP borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac do not currently benefit from principal reduction loan modifications. To encourage the GSEs to offer this assistance to its underwater borrowers, Treasury has notified the GSE’s regulator, FHFA, that it will pay principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification.

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Jan

26

Low Rates Until 2014

January 26, 2012 | Interest Rates  |  Leave a Comment

Federal Reserve officials said they expect to keep short-term interest rates near ZERO for almost three more years until 2014 which was increase six more months from last August when they were stating rates would stay near zero until Mid-2013. Also in more efforts to speed up the economic recovery they could restart the controversial bond-buying program.

Fed officials still indicate frustration at the slow pace of growth and a bit more confident that inflation is settling down after climbing last year. Bernanke poker faced as usual stated the combination of persistent slow growth and low inflation could give the Fed leeway to take more action to support the economy.

In announcing that short term interest rates will remain the same, the Fed is hoping that long term interest rates will fall which hopefully will lead to increased investing, spending and growth. Hoping is the key word because everything Bernanke seems to say or think on fixing our economy sure doesn’t seem to be working, which coupled with him thinking housing isn’t key to our economic recovery.

And if the economy doesn’t show more improvement Bernanke will resign, no just kidding!!! Per Bernanke “if the recovery continues to be modest and progress on unemployment very slow and inflation appears to be likely to be below target for a number of years out” Bernanke says there would be a “very strong case” for more action with the bond-buying program which is meant to push down long-term interest rates. My magic eight ball app on my phone is telling me that we will have a Very Strong Case.

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Jan

24

The Beigebook Report – St. Louis Economy

January 24, 2012 | Government  |  Leave a Comment

Eighth District — St. Louis

Summary of Commentary on Current Economic Conditions By Federal Reserve District December 2011

The economy of the Eighth District grew at a modest pace since our previous survey.

Manufacturing activity has increased since the previous report and activity in the services sector has also increased. Residential real estate activity, in contrast, has continued to decline.
Commercial and industrial real estate activity has been sluggish, although contacts noted improvement in some areas. Overall lending at a sample of small and mid-sized District banks declined slightly in the three-month period from mid-September to mid-December.

Manufacturing and Other Business Activity
Manufacturing activity has increased since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or decrease operations. Firms in the industrial gas, metallic component, automotive parts, primary metal, and clothing manufacturing industries
announced plans to increase operations and hire new workers. In contrast, firms in the speaker component, medical equipment, furniture, and dye manufacturing industries announced plans to decrease operations and lay off workers. Activity in the District’s services sector has increased since our previous report. Firms in distribution services, consulting services, and health services announced plans to expand operations and hire new workers. Several general retail contacts in the District reported stronger
holiday sales compared with last year. District auto dealers reported strong sales of luxury automobiles and pickup trucks.

Real Estate and Construction
Home sales continued to decline throughout most of the Eighth District. Compared with the same period in 2010, November 2011 year-to-date home sales were down 3 percent in Memphis, 4 percent in St. Louis, 5 percent in Louisville, and 7 percent in Little Rock.
Residential construction also continued to decrease throughout the District. November 2011 year-to-date single-family housing permits decreased in the majority of the District’s metropolitan areas compared with the same period in 2010. Permits decreased 1 percent in Memphis, 17 percent in Louisville, and 21 percent in Little Rock and St. Louis.
Commercial and industrial real estate activity was slow throughout most of the Eighth District. Contacts in central Kentucky reported that commercial real estate activity continues to be sluggish, while contacts in central Arkansas reported soft demand for commercial real estate loans. Contacts in Louisville noted that the health care industry is providing most of the current
demand for office spaces. Commercial and industrial construction activity remained unchanged throughout most of the District. Contacts in south-central Kentucky reported that construction activity is modest but noted new commercial construction projects in the Scottsville and Bowling
Green areas. Contacts in St. Louis reported continued limited construction, while contacts in Louisville noted that speculative development has still not recovered. Contacts in western Kentucky reported that construction firms are experiencing little activity with the exception of government-related projects.

Banking and Finance
Total loans outstanding at a sample of small and mid-sized District banks decreased 0.2 percent in the three-month period from mid-September to mid-December. Real estate lending,
which accounts for 73.4 percent of total loans, decreased 0.5 percent. Commercial and industrial loans, accounting for 15.5 percent of total loans, decreased 0.2 percent. Loans to individuals, accounting for 4.7 percent of loans, increased 2.0 percent. All other loans, accounting for 6.4 percent of total loans, increased 8.0 percent. Over this period, total deposits increased 0.3 percent.

Agriculture and Natural Resources
As of the beginning of December, the number of bales of cotton ginned (separated from the seed) in the District states was up by 11.9 percent over the same period in 2010. Monthly output of commercial red meat for October 2011 increased compared with September 2011 and October 2010. However, the District’s total live weight and number of young chickens slaughtered decreased between September and October 2011. The District’s monthly coal
production for November 2011 was 2.7 percent lower compared with November 2010; however, the District’s year-to-date coal production at the end of November 2011 was 2.8 percent higher than the same period in 2010.

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Jan

23

How is Your Credit Score Determined?

January 23, 2012 | Credit  |  1 Comment

•A FICO Score takes into consideration  5 categories, not just one or two.
•The importance of any factor depends on the information in your entire credit report.
•Your FICO Score looks only at the credit-related information contained in your credit reports.
•Your FICO Score considers both positive and negative information from your credit reports.

1. Payment History
Approximately 35% of your FICO Score is based on this information, which includes:
•Payment information on many types of accounts:
◦Credit cards – such as Visa, MasterCard, American Express and Discover.
◦Retail accounts – credit from stores where you do business, such as department store credit cards.
◦Installment loans – loans where you make regular payment amounts, such as car loans and mortgage loans.
◦Finance company accounts.
•Public record and collection items – reports of events such as bankruptcies, foreclosures, suits, wage attachments, liens and judgments.
•Details on late or missed payments (“delinquencies”) and public record and collection items.
•The number of accounts that show no late payments.

2. The Amounts You Owe
Approximately 30% of your FICO Score is based on this information.
Credit utilization, one of the factors evaluated in this category, considers the amount you owe compared to how much credit you have available. You can control how much you use and lenders determine how much credit they are willing to provide. FICO’s research shows that people using a high percentage of their available credit limits, compared to people using a lower level of credit, are more likely to have trouble making some payments now or in the near future.

Having credit accounts with an outstanding balance does not necessarily mean you are a high-risk borrower with a low FICO Score. A long history of demonstrating consistent payments on credit accounts is a good way to show lenders you can responsibly manage additional credit.

In this category, your FICO Score takes into account:
•The amount owed on all accounts.
•The amount owed on different types of accounts.
•Whether you are showing a balance on certain types of accounts.
•The number of accounts where you carry a balance.
•How much of the total credit line is being used on credit cards and other revolving credit accounts.
•How much is still owed on installment loan accounts, compared with the original loan amounts.

3. Length of Credit History
Approximately 15% of your FICO Score is based on this information.
In general, all else being equal, a longer credit history will increase your FICO Score. However, even people who have not been using credit long could get a fairly high FICO Score, depending on how their credit report looks in terms of the other four categories of information, particularly the first two. In this category your FICO Score takes into account:
•How long your credit accounts have been established. Your FICO Score considers the age of your oldest account, the age of your newest account and the average age of all your accounts.
•How long specific credit accounts have been established.
•How long it has been since you used certain accounts.

4. New Credit
Approximately 10% of your FICO Score is based on this information.
FICO’s research shows that opening several credit accounts in a short period of time represents greater risk – especially for people who do not have a long credit history. In this category your FICO Score takes into account:
•How many new accounts you have.
•How long it has been since you opened a new account.
•How many recent requests for credit you have made, as indicated by inquiries to the credit reporting agencies.
•Length of time since credit report inquiries were made by lenders.
•Whether you have a good recent credit history, following past payment problems.
FICO Scores do not penalize you for “rate shopping” when seeking a mortgage, auto loan or student loan. To enable you to shop for the best rate, the FICO Score ignores inquiries for similar financing types made in the 30 days prior to scoring. That means all inquiries made during your shopping period are counted as one inquiry when determining your score. This shopping period is 45 days on the newest versions of the FICO Score. Each lender chooses which version of FICO Score it wants to use.

5. Types of Credit in Use
Approximately 10% of your FICO Score is based on this information.
Your FICO Score considers your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is not necessary to have one of each, and it is not a good idea to open a credit account you don’t intend to use. In this category your FICO Score takes into account:
•What kinds of credit accounts you have. Do you have experience with both revolving (credit cards and lines) and installment (fixed loan amount and payment) accounts, or has your credit experience been limited to only one type?
•How many accounts you have of each type. Your FICO Score also looks at the total number of accounts you have. For different credit profiles, how many is too many will vary depending on your overall credit picture.
What a FICO Score Ignores
FICO Scores consider a wide range of information on your credit report. However, they do NOT consider:
•Your race, color, religion, national origin, sex and marital status. U.S. law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.
•Your age. Other types of scores may consider your age, but FICO Scores don’t.
•Your salary, occupation, title, employer, date employed or employment history. Lenders may consider this information, however.
•Where you live.
•Any interest rate being charged on a particular credit card or other account.
•Any items reported as child/family support obligations or rental agreements.
•Certain types of inquiries (requests for your credit report or score). Your FICO Score does not count any inquiries you initiate, any inquiries from employers or insurance companies, or any inquiries lenders make without your knowledge.
◦Checking your own credit report and score is not considered in scoring models such as the FICO Score.
◦Asking your friend in the lending business to pull your credit report and score is not only prohibited by contract, it will also count as an inquiry in future scores – don’t do it!
•Any information not found in your credit report.
•Any information that is not proven to be predictive of future credit performance.

And remember please forward this along and make sure to subscribe at the top right if you already are not subscribed.

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Jan

19

USA Mortgage Surpasses $1 Billion

January 19, 2012 | Housing  |  Leave a Comment


St. Louis-Based USA Mortgage Surpasses $1 Billion in
Annual Loan Volume in 2011 for Third Consecutive Year

ST. LOUIS – For the third consecutive year, USA Mortgage has eclipsed the $1 billion milestone in annual loan volume. Further, for the first time in its history, the company is on pace in 2011 to become the #1 mortgage lender in greater metro St. Louis with an approximate 7.07 percent market share. (The metro St. Louis statistical area includes Jefferson, St. Charles and St. Louis counties and the City of Louis.)

“2011 is proving to be a year of superior accomplishment for our more than 300-plus employee team,” said Doug Schukar, president and chief executive officer of DAS Acquisition Company, LLC, the largest mortgage bank in metro St. Louis and the parent of USA Mortgage. “We have surpassed our original projections for loan volume and loans processed by a wide margin. Additionally, as 2011 unfolds, we are beginning to achieve significant separation from the pack of our competitors.”

A structural advantage – the ability to handle all aspects of the loan process, from origination through closing and funding – continues to help USA Mortgage/DAS attract top licensed mortgage loan officers and grow market share. “Keeping the entire process in-house expedites mortgage acquisition and enables us to be extremely responsive, providing our customers with a level of personal service beyond the industry norm,” Schukar explained.

Based at 12140 Woodcrest Executive Dr. in Creve Coeur, Mo., USA Mortgage operates a total of 15 offices in St. Louis, out-state Missouri, Illinois and Iowa.

For the second consecutive year in 2011, USA Mortgage/DAS was ranked by Inc. magazine in the annual Inc. 5000 compilation of the nation’s fastest-growing private companies. Schukar was also a finalist in the Midwest region for the 2011 Entrepreneur of the Year award sponsored by Ernst & Young.

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Oct

7

Heads Need To Roll At HUD

October 7, 2011 | Government  |  Leave a Comment

The Federal Government comes up with a $1 Billion Dollar program to help unemployed homeowners avoid foreclosure with $568 Million left unspent and returned to the U.S. Treasury.

The program was a good idea to allow for up to $50,000 in forgivable loans to homeowners that had lost their jobs. As usual all you hear is the blame game and why this program didn’t help many more in need.

I can picture what’s going on at HUD and everyone sitting around the table all with the same knowledge of how to improve housing that the boss has in the Dilbert comic. It should be no surprise why things are not getting better in our economy.

With the housing crisis and home values leading the way for the so called double dip its clear the government officials need to lose their jobs. Heads Need To Roll!!!

It boils my blood that One Billion dollars to help people in need which would help and all you get is a response from the HUD Assistant Secretary Carol Galant is that the program setup “took longer than anticipated.” And that the program requirements disqualified more applicants than anticipated.

This is just Sad and a Clear FAILURE on HUD’s part and just shows how these people don’t understand the magnitude of their actions nor do they have an understanding on how to fix the problem. They need to pay people from the private sector to tell them what to do.

Let’s face it everything HUD is doing isn’t working. If would be dream if someone from HUD would call and ask me my thoughts and actually take some action to listen and implement needed programs to improve the economy fast.

The economy crashed fast and it can equally turn around fast. It’s been down long enough and there’s no reason to think we can’t get the much needed fast improvements.

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Sep

21

5 Signs You’re In An Abusive Relationship

September 21, 2011 | Banks  |  Leave a Comment

Is it time to start fresh and actually share in some of the wealth that we “Joe Taxpayer” the ones that helped bail out the Big Banks with all the TARP Money. You know the Fat Cat Cigar Chomping Bankers lying in their yachts not having a clue on how to run a business are ever so weary of losing their yachts that they’ve got to figure out a way to gouge you and nickel and dime you to death with there ever so fine print ways.

1. There’s no way to escape maintenance fees on your account.
2. You must open a second account to earn rewards or have fees waived.
3. Your bank charges you more than $2 to withdraw your money using another bank’s ATM
4. Being limited to number of accounts that you can pay online for free before they start charging you
5. Waiting longer than five minutes for a teller at a branch or having to deal with going through more than three menus on the phone before you can get a live person.

So if any of this is happening to you – You need to give the bank the boot and find a different bank that isn’t spending all their advertising dollars on your favorite sports stadium name.

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