Cancelling Private Mortgage Insurance

Happy Friday and Fourth of July!

Please see attached a great chart on Conventional Mortgage Insurance Cancellation. Feel free to use this in an update to clients and prospects or in any newsletter.  Or, your client can simply call me for the information over the phone.  🙂

Be safe!


Mortgage Rules Eased Again

Happy Friday Again!  Mortgage rules easing again! Debt to Income (DTI) Ratios expanding.

July 29th, this rule takes affect for Fannie Mae.  Freddie Mac and Fannie Mae more recently have allowed this case by case with enough compensating factors, but often loans would not receive that enviable “approve/eligible” finding.  Now, it appears we will see many more approvals possible.  Often there is income in a family that can not be counted according to the rules, cash, short term bonuses, short term overtime, 2nd job that does not have two years history or other famiy member income where they are not going on the loan, etc.  So this can make a lot of sense after a 2nd look.  🙂

The maximum allowable debt-to-income ratio (DTI) in DU will be adjusted in DU Version 10.1. Under the adjustment, DU will consider applications with a maximum DTI of 50%. For DTIs above 45% and up to 50%, DU will no longer require certain additional compensating factors. 

All the best on this great Friday!


Mortgage Market Weekly – Update Mar 16, 2015

In This Issue…

Last Week in Review: Winter put a damper in February Retail Sales, while Freddie Mac expects 2015 to be a great year for home sales and new construction.

Forecast for the Week: A Fed meeting is ahead, plus key reports on housing and manufacturing.

View: The first quarter of 2015 is nearly over. Perform a quick success check-in with these six tips.

Last Week in Review

“Feel the heat.” Robert Palmer. Feel the chill is a more apt description of what retailers experienced in February, as the harsh winter weather put a damper on sales.

retail-sales_2015-03-16February Retail Sales fell by 0.6 percent, well below expectations, marking the third straight month of declines as Americans have been slow to spend the savings from lower gas prices in recent months. Sales were led lower by a decline in spending at restaurants and home improvement retailers due to the cold weather.

The Retail Sales report is the most timely indicator of broad consumer spending patterns. It is also a critical factor to watch in our economic recovery, and it will be important to see if these numbers improve once the weather warms up. [Read more…]

Mortgage Market Weekly – Update June 20, 2014

In This Issue…

Last Week in Review: Housing is cooling, inflation is warming and the Fed announced more tapering.

Forecast for the Week: Important housing, inflation and consumer confidence reports are ahead. Plus, we’ll get news on the state of our economy with the final reading for first quarter Gross Domestic Product.

View: Good communication skills are critical to succeeding in business. Mastering the art of telling a good story is a key component. [Read more…]

Government Shutdown and Lending

Before my comments, this is what you may see for a while in the news:


It appears that loan applications will continue on, rates will still be locked, appraisals ordered and loans underwritten.  However, that “4506 transcript” from the IRS will still be required by all lenders I have researched at this point, but instead of at the origin of underwriting, will be required as a funding condition, at least by lenders who are putting their customers first.

I requested several years ago that my personal staff and underwriter NEVER hold up a file over a 4506 transcript. Either the file is a viable file or not at origination and holding it up for a transcript is an insult to your clients, both borrowers and Realtors. So, the only question mark here is how long it will be before that part of the government is operational so loans can actually close. Well, there is one other question….or two, or three…..if we as a people become more and more dependent on the government, e.g. turning over more and more of our independence…..Health Care, retirement, housing, to name only a few, how does this not teach us a lesson about worse things to come?  Does it not make sense to furlough all politicians for about 9 months out of the year, so they only have 3 months a year to wreak havoc on the American public?  Notwithstanding the few who are really looking out for us and our kids and grandkids future, the rest of the lot should get real jobs, paying taxes, and living under everything they have handed down for decades. NO exemptions or special health care or special retirement packages.  Statesmen are what we need, God fearing not ballot box fearing!

Here are a few additional remarks I have pulled from Rob Chrisman’s Leadership Report.

“…..the IRS staff is also staying in bed today, and lenders are telling staff that it is doubtful that Tax Transcripts can be obtained and therefore they can process and underwrite loans without the Tax Transcripts but will not be able to close or fund until the Tax Transcripts have been obtained.”

stress350“Does anyone know whether FNMA is offering relief on validation of tax returns since the IRS is not validating returns during the shutdown?” Fannie just issued a new selling guide announcement. It provides details on a number of underwriting considerations for lenders with regard to the shutdown. It is posted on The mortgage market, including Fannie Mae and Freddie Mac, should not be affected by the government shutdown, SIFMA Managing Director Chris Killian said. “Fannie and Freddie should be unaffected by the government shutdown (Freddie Mac went so far as to issue a client update stating this), Ginnie Mae informs us that their [mortgage-backed securities] and Multiclass Securities Programs and operations continue uninterrupted, and [the Federal Housing Administration] appears to be able to endorse loans,” Killian said. “However, SIFMA urges Congress to come to a resolution as soon as possible.”

More to come…

HELOCS (Home Equity Line of Credit) Will Pose a New Threat

warning-sign200When it is reported that the Feds did not raise rates or they did raise rates, THIS IS NOT referring to LONG TERM MORTGAGE RATES. This is the Federal funds rate. When you take the Federal Funds rate of .250 plus the current 3% spread, you get the going prime rate of 3.250. This is the index that most credit cards and Helocs are tied to for adjustments. The Feds have not changed this rate since Dec. 16, 2008 and may not change it again for another year or two, let’s hope…..for those with Helocs.

Remember that the Feds raise the Fed rate or lower the Fed rate when they think the economy needs slowing down or stimulated. When they take the “first” step of tightening or loosening, approximately every 6 weeks, it is non-stop for 12-18 months at increments of .250 to .500 usually. So this is how much your rate and payments will go up, in most cases immediately, not at the end of the month, non-stop until they decide enough tightening is sufficient.

If you are at your 10 year point, unfortunately your loan could also begin a final recast or final amortization. If your loan is 50,000 or less your loan could amortize over 15 years. If your current balance is greater than 50,000 you may have an option for a 30 year amortization. Most rates right NOW at the recast rate are usually between 7-8.5%. Some banks may offer a Heloc modification or refinance but I would not count on this.

One of the most onerous rules to date is that if you pay off a Heloc or 2nd trust deed by combining it with your 1st trust deed, which in most cases is the wisest thing you could do, you are penalized by calling it a “cash out event” with higher fees, which lead to a higher interest rate. If you have 20% equity or more you are fine, and at 40% equity, there is no “hit or fee”. (These apply via Fannie/Freddie as LLPA’s-Loan Level Price Adjustments, not lender overlays) And this is usually on 417,000 or lower loans, not high balance loans where you often have to have 25% equity. The only exception is if the 2nd lien was part of your original purchase transaction, which is not very common. One other exception is a portfolio loan which allows this to be treated correctly, as a rate and term refinance, NOT a cash out event, but the product selection at this time is a venue of 1,3,5,7 & 10 year fixed ARM loans only, not 30 year fixed. Lastly, as we begin to see some rule changes solving similar problems in other areas, we would hope to see this grievous issue addressed with a rule change… just not holding my breath….

So, if you have a Heloc and we have not talked in the last several months, it may be time to review your situation again, especially with the latest appreciation of homes.

Mortgage Insurance Cancellation – What You Need to Know

mortgage-ins-250Effective July 29, 1999, the Homeowners Protection Act (HPA or Act) requires that private mortgage insurance be cancelled when a loan reaches certain, specified thresholds. The Act’s MI cancellation policy applies to privately insured first mortgages:

  • on single-family, primary residences, AND
  • closed on or after July 29, 1999, AND
  • for the purpose of financing the acquisition, initial construction or refinancing of the dwelling.

Following the HPA’s lead, Fannie Mae and Freddie Mac have  updated their own MI cancellation policies, in accordance with the Act, for privately insured first mortgages.

For more information, please check out the informative free downloads here:


Federal Housing Finance Agency Extends HARP to 2015

The Federal Housing Finance Agency (FHFA) today directed Fannie Mae and Freddie Mac to extend the Home Affordable Refinance Program (HARP) by two years to December 31, 2015. The program was set to expire on December 31, 2013.

To be eligible for a HARP refinance, homeowners must meet the following criteria:

  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March – May 2009
  • The current loan-to-value (LTV) ratio must be greater than 80%
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months

Unlimited Loan To Value

No OVERLAYS or program restrictions – Unlimited LTV/CLTV

  • FHFA-HARP-extension-prNo Minimum Credit Score – Determined by AUS
  • Primary, 2nd Homes and Non-Owner Allowed
  • Single Family, 1-4 unit properties, condos, PUDS & manufactured homes
  • Expanded Approval Levels I, II and III allowed (Refi Plus)
  • No limit on the number of properties financed
  • CMG picks up the cost of the appraisal waivers (do not disclose on GFE)
  • Fast Turnaround times – Close within 30 days!

Click here to download copy of the FHFA HARP Extension Press Release (PDF)

When Can I Apply For a New Mortgage? (after shortsale, foreclosure or bankruptcy) Fannie Mae-Freddie Mac Announce 2011 Waiting Periods

For several years now homeowners who have filed bankruptcy, lost their home to foreclosure or sold their home in a “short sale” have asked, “when can I apply for a new mortgage?”

Fannie Mae and Freddie Mac have published their rules on bankruptcies and foreclosures for years.  However, though they have had a category called pre-foreclosure sales  there has not until recently been a category under “shortsale”.

In the most  recent publication of rules and waiting periods, Fannie Mae and Freddie Mac have addressed this category as well.  And, based on the new rules, it appears to be advantageous to consider the short sale over foreclosure, at least as it relates to a “waiting period” for reapplication.

However, in every consideration regarding financial hardships and the dispostion of a real estate property,  it is advisable to obtain expert legal counsel from a real estate attorney who specializes in shortsales and foreclosure law.  Following is a link to a “summary” of the new rules.  Feel free to contact my office for further information.

Click her for the new 2011 waiting periods