South Carolina | Home Loan | Mortgage | Refinance

Archive for January, 2010

To tell us how the economy is doing, should we really look at the stock market? Probably not, as many experts believe that prices are more impacted by psychology than by fundamental items such as earnings — in spite of what reporters say. So although the markets have been rallying, and the majority of company’s earnings reports beating expectations, they are still paying a price. Companies are beating estimates due to cost cutting measures instead of growing revenue. In fact, of the companies recently reporting earnings, almost 75% reported year-over-year declines in revenue which does not bode well for economic fundamentals such as employment and ultimately for consumer spending.

Have you ever heard of Bayview Mortgage Capital? Me neither, until I read a report saying that they are a “newly formed” mortgage company, with their parent (Bayview, out of Florida) being owned by the Blackstone Group, and that they filed for a $500 million IPO (initial public offering). Per the report, they will be using the money to possibly qualify as a REIT and/or to use the money to buy distressed real estate loans from banks and other lenders and investors. “According to a filing with the U.S. Securities and Exchange Commission, the new company plans to use the real estate investment trust (REIT) tax structure…The company plans to buy and manage residential and commercial mortgage loans, mortgage-backed securities, real estate-related securities, real estate, and various other forms of real estate investment it believes are undervalued.”

WSFS Financial, out of Delaware, is backing out of its joint venture in the reverse mortgage field. Early last year WSFS acquired a majority interest in 1st Reverse Financial Services, but in their press release believe that it is unlikely that they will make a profit, and are therefore withdrawing from the venture. On the other hand, Security One Bank and Texas Capital Bank have agreed to double the size of its existing warehousing facility for reverse mortgages. In fact, according to the statement, Security One Lending has doubled its business since early March after it acquired OMNI Reverse Mortgage.

What is Flagstar’s current stance on the “government-offered, investor-disinterested” $8,000 tax credit for first time home buyers? (ARRA provides a tax credit of up to $8000.00 to first-time homebuyers who purchase a home on or before November 30, 2009. Government entities and FHA-approved non-profit agencies that are considered instrumentalities of government may provide tax credit advances with a second lien. The tax credit advance may be used to make the down payment and pay closing costs, discount points and pre-paid expenses.) Flagstar will allow tax credit advances with second liens from eligible governmental agencies and instrumentalities of government as long as the organization is also on Flagstar’s list of eligible community second programs.” Check out this website to make certain a non-profit agency is both FHA-approved and an instrumentality of government, refer to the appropriate homeownership center’s list of approved non-profit agencies.

Freddie Mac sent out a bulletin “providing detailed requirements for recently previewed and new changes for Relief Refinance Mortgages with LTV ratios greater than 105 percent and less than or equal to 125 percent, including expanding the reduced term incentive to cover a broader range of shorter term mortgages, expanding sale options for Relief Refinance Mortgages — Same Servicer with LTV ratios less than or equal to 105 percent to provide added flexibility for Seller/Servicers that traditionally sell mortgages through our servicing-released sales process, and expanding the Number of Units delivery fee grid and adding new delivery fee rates for eligible mortgages secured by 3- to 4-unit properties to reflect the higher LTV ratios permitted for Relief Refinance Mortgages.” Any originator interested in funding these loans had best refer to Freddie’s updated guidelines for accurate delivery instructions, since one wouldn’t want to make a mistake with a 125% LTV loan!

U. S. Bank’s Wholesale Division clarified the determination of the LTV to be used to calculate the monthly MIP for FHA Streamline Refinance transactions without appraisals. Specifically, the LTV for “FHA Streamline Refinance transactions, without an appraisal, must be calculated by dividing the new base loan amount (before adding the UFMIP) by the original property value. The Refinance Authorization, provided by the FHA Connection, provides the original property value to be used for calculating the LTV.” And “To ensure correct TIL disclosure, the LTV for FHA Streamline Refinance transactions, without an appraisal, must be calculated using the original property value and original mortgage amount from the previous FHA transaction.”

Important Information Regarding the MDIA (Mortgage Disclosure Improvement Act)

Effective Thursday, July 30, 2009, (for all applications received by Ascent Home Loans) some of the provisions in the final rule for revisions to the Truth-in-Lending Act (TILA) become effective. The specific provisions effective by this new rule implement the Mortgage Disclosure Improvement Act (MDIA). I have attached an announcement from Franklin American which covers the entire Act.

Mortgage lenders in Australia rarely deal with brokers that cannot submit a high volume of successful home loan applications to them each month. For example, a particular bank or non-bank lending institution might refuse to deal with an entity that cannot close at least one million dollars worth of mortgages with them on a monthly basis.

For most mortgage brokers this may not seem like a daunting task. One million dollars worth or home loans may constitute anywhere between one and five successful applications. Most brokers would be able to close at least that much business each month and would therefore be able to do business with the particular lender.

However a problem arises when the scope of the mortgage broker business model is considered in full. Brokers are in business to offer choice to their customers. In Australia, brokers offer mortgage products to their clients from up to around thirty different lenders. It is this choice that attracts customers to brokers instead of applying directly with a lender. A problem arises when each of the thirty lenders demand that at least one million dollars worth of business is closed with them each month. This would mean that in order for the broker to maintain a business relationship with all thirty lenders, they would need to close over thirty million dollars worth of home loans each month, evenly spread between each lender. This is an impossible task for even the best mortgage broker to achieve.

Aggregators solve this problem by acting as an entity between the lenders and brokers. An aggregator will have several brokers working for them – perhaps hundreds – and will allow them to submit their home loan applications through them. The aggregator will in turn send the applications on to the lenders. This business model ensures that more than enough applications are sent to each lender each month to maintain the relationships. The final result is that each broker working for the aggregator will be able to offer home loan products from the full range of lenders.

Mortgage aggregators are often found in the form of franchisors. The franchisor can have up to several hundred franchisees working for them. The franchisees will use the brand name of the master franchise and will often receive benefits such as training and software. It should be noted that while the franchise model is popular with mortgage brokers in Australia, not all aggregators are master franchises.

Because mortgage brokers receive their income by way of commissions awarded by lenders for successful home loan applications, it follows that aggregators receive a portion of the commissions for all loan applications put through them. Brokers therefore surrender part of their commission in return for the benefit of using an aggregator. There may be additional franchise fees payable if the broker is a franchisee, although this arrangement will vary from franchise to franchise.

In all, aggregators are a necessary part of the mortgage broking industry in Australia. They allow brokers to offer their clients a wide variety of lenders and home loan products and provide an umbrella entity that can assist brokers with training and support throughout their careers.

Qualified Mortgage Brokers here to help you find a suitable home loan for your personal situation http://www.moneynet.com.au

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Understanding the process of re-financing can be quite dizzying. Homeowners who are considering re-financing might initially be overwhelmed by the number of options available to them. However, after taking some time to educate themselves about the process, they will likely find the process is not nearly as daunting as they had imagined. This article will discuss some of the options available to those interested in re-financing as well as some of the important factors to consider in order to determine whether or not refinancing is worthwhile.

Consider the Options

Homeowners have quite a few options available to them when they are considering the possibility of re-financing their home. The most significant decision is the type of loan they will choose. Fixed rate mortgages and adjustable rate mortgages (ARMs) are the two main types of mortgages the homeowners will likely encounter. Additionally there are hybrid loan options available.

As the name implies, a fixed rate mortgage is one in which the interest rate remains constant throughout the duration of the loan period. This is an especially favorable type of loan when the homeowner has credit which is sufficient enough to lock in a low interest rate.

ARMs are mortgages where the interest rate varies during the course of the loan period. The interest rate is usually tied to an index such as the prime index and is subject to rises and falls in accordance with this index. This is considered a riskier type of loan and is therefore often offered to homeowners who have less favorable credit scores.

Although ARMs are considered somewhat risky there is usually a certain degree of protection written into the loan agreement. This may come in the form of a clause which limits the amount the interest rate can increase, in terms of percentage points, over a fixed period of time. This can protect the homeowner from sharp increases in the interest rates which would otherwise considerably raise the amount of their monthly payments.

Hybrid loans are mortgages which combine a fixed element with an adjustable element. An example of this type of loan is a situation where the lender may offer a fixed interest rate for the first five years of the loan and a variable interest rate for the remainder of the loan. Lenders typically offer a lower introductory interest rate for the fixed period to make the mortgage seem more enticing.

Consider the Closing Costs

The closing costs associated with re-financing should be carefully considered when deciding whether or not to re-finance the home. This is significant because when homeowners re-finance their home they are often subject to many of the same closing costs as when they originally purchased the home. These costs may include, but are not limited to appraisal fees, application fees, loan origination fees and a host of other expenses. These costs can be quite significant. The closing costs will be significant when the homeowner considers the overall savings associated with re-financing.

Consider the Overall Savings

When deciding whether or not to re-finance, the overall savings is one factor the homeowners should carefully consider. This is important because re-financing is typically not considered worthwhile unless it results in a financial savings. Although some homeowners refinance to lower monthly costs and are not concerned with the overall picture, most homeowners consider whether or not they will be saving money by refinancing.

The amount of money the homeowner will save when re-financing is largely dependent on the new interest rate in relation to the old interest rate. Other factors come into play such as the remaining balance of the existing loan as well as the amount of time the homeowner intends to stay in the home before selling the property. It is important to note that the amount of money saved by negotiating a lower interest rate is not equal to the entire savings. The homeowner must determine the closing costs associated with re-financing and subtract this sum from the potential savings. A negative number would indicate the new interest rate is not low enough to offset the closing costs. Conversely a positive number indicates an overall savings. With this information the homeowner can decide whether or not he wishes to re-finance.

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