Fannie Mae and Freddie Mac have “lookup” forms on their respective websites. Check Fannie Mae’s first because Fannie Mae’s market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP.

2. If my mortgage is held by Fannie Mae or Freddie Mac, does that mean I’m instantly eligible for the Home Affordable Refinance Program?

No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.

3. Is “HARP” the same thing as the governments “Making Home Affordable” program?

Yes, the names HARP and Making Home Affordable are interchangeable.

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

Find a recent mortgage statement and write “Fannie Mae” or “Freddie Mac” on it — whichever group backs your home loan — so you don’t forget. Give that information to us when you apply for your HARP refinance.

Even though this legislation has passed - all lenders are not all required to participate.  For right now, your first step is to contact a mortgage professional and get information as to their participation.

In the case of all loans, your loan must be delivered back to the existing owner of the loan.  Meaning, if Fannie Mae is the owner of the loan, the loan must be delivered to Fannie Mae and underwritten according to their guidelines.  The same is true for Freddie Mac.  You must first determine who owns your loan.  A borrower has the ability to do this by contacting their servicer and asking…or by using the links below.

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?

Let’s look at the guidelines for both Fannie Mae and Freddie Mac and point out some of the key factors we see that will impact or enhance your ability to participate.

Here are a few of the new HARP Program qualifying guidelines:

Loan is backed by Fannie or Freddie [click to check the respective "look-ups"].
Your current mortgage home loan must have been securitized prior to June 1, 2009 by FNMA or FHMLC.
You  must have paid your mortgage on-time for the prior 6 months.
You must have paid on time for 11 of the last 12 months, or have no more than one 30 day late payment in that period.

It may be until early March before the banks will start accepting applications for HARP Refinances, but the numbers of packages are already stacking up… and if the program is all that we hope it will be for Arizona home owners, there will be a bunch of people running to get through the door.

No Loan-To-Value HARP Refinance for Phoenix Home Owners Underwater

• Fannie Mae, Freddie Mac and some of the bigger banks (Wells Fargo and Chase) are putting foreclosures on hold over the 2011 holiday season.  Starting Dec 19^th until after Jan 2^nd families in foreclosed homes won’t be kicked out.

• Fannie Mae officially announced the Conventional loan limits for 2012 are unchanged (Conventional limit in Arizona is $417K for one unit home).  Please click here to see full mortgagee letter.

• Well, the VA decreased funding fee was short lived.   On Nov 21^st the President signed into law that the reduced funding fee will once again revert back to the previous amounts until Sept 30^th 2016 – unless otherwise updated (For loans with a down payment of less than 5% the funding fee is 2.15% for a Veteran using it for the 1^st time or 3.3% for a Veteran subsequent use.)  Click here to see entire chart.

• Click here to see where Arizona’s unemployment numbers compare to the rest of the United States

HUD has announced that the loan limit will revert back to the previous limit of $346,250 through Dec 31^st, 2012.

Please click here to see the mortgagee letter.

Hi Dave!  You remember those clients I referred to you that where moving from Texas to Arizona?  You spoke with them and took their information over the phone.  You also asked them to send you paystubs, so you could verify their income.  I had one of my agents take them out to look at homes.  They didn’t want to send their paystubs, so she referred them to another lender that did not require them to issue an pre-approval. 

I didn’t have a chance to do the loan….. because I asked for paystubs to verify they were qualified???  Why would any agent not want to know that their clients were in fact qualified? 

Well Dave.. they put an offer on a home and it was accepted.  We ordered the termite report and it came back 4 weeks ago.  Now we are ready to fund, but the lender is telling me she can not fund because they do not have a clear termite report.  It has “water damage” listed as being on the property.  Have you ever had this problem? 

Yes!  Yes, I have and I would have prevented this from being an issue about 3 weeks and 6 days ago by simply reviewing the report when it was originally completed.  So, I tell her how we worked around this issue on a transaction we had the same problem on a year ago.  

It’s a double edge sword…….Ask for too much documentation and your buyers go to someone else.  Don’t ask for enough and your transaction falls apart at the 11^th hour.  I would prefer to lose the buyers and keep my integrity.

As consumers, we’ve all been taught that shopping around for a mortgage to get the best deal is critical. When shopping for your Phoenix home mortgage, it’s fairly easy to check online or make some phone calls to determine rates.

Once you have had an opportunity to narrow down your search for the right lender, it will also be important to ask some essential questions to make sure they’re educated regarding mortgage rates. With Phoenix mortgage interest rates changing quite frequently, sometimes several times during the day, it’s important to make sure your lender can answer basic questions. The following questions and answers will allow you to determine if your lender can provide you with an affordable loan and, most importantly, have the expertise to get you the lowest rate.

•1. Who determines mortgage rates and what are they tied to?

Mortgage interest rates are determined by the pricing of Mortgage Backed Securities or Mortgage Bonds. The media often implies mortgage rates are based off the 10-year Treasury Note, which is incorrect. While the 10-year Treasury Note typically trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions.

•2. How often do mortgage rates change?

Mortgage rates constantly change throughout the day; however, since mortgage rates are based on Mortgage Bond prices, they only change on days when the Bond markets are trading securities. Think of a Mortgage Bond’s sales price similar to that of a Stock. It trades up and down during the course of a day. For example, the FNMA 30-Year 4.50% coupon is selling for $100.50. The price is 50 basis points lower from the previous day’s closing price of $101.00. In simple terms, the consumer would have to pay an additional .50% of their loan amount to have the same rate today that they could have locked in the previous day. Alternatively, the consumer would also have the option of increasing their rate by .125%.

•3. What causes mortgage rates to change?

Mortgage Bonds are largely affected by various economic forces that influence the ever changing demand for bonds within the market. Each week various economic reports are released that influence the movement within the bond markets. Some of the key economic factors that have the greatest impact are unemployment percentages, inflationary fears, economic strength and the overall movement of money in and out of the markets. Like stocks, most fluctuation is caused by consumer and investor emotions.

•4. What do you use to monitor mortgage rates?

There are several great subscription based services available to monitor Mortgage Bond pricing. The key is to make sure the lender is aware they should be monitoring Mortgage Bond pricing, such as the Fannie Mae 30-Year 4.50% coupon, and not the 10-Year Treasury Note.

•5. When the Fed changes rates, why do mortgage rates move in the opposite direction?

It is a common misconception that when the Federal Reserve implements a rate cut that it is immediately correlated to a reduction in mortgage rates. The Federal Reserve policy influences short term rates known as the Fed Funds Rate (“FFR”). Lowering the FFR helps to stimulate the economy and increasing the FFR helps to slow the economy down. Effectively, cutting interest rates (FFR specifically) will cause the stock market to rally, driving money out of bonds and creating potential for inflation. Mortgage Bond holders need to obtain a higher rate of return on their money if inflation is increasing, thus driving up mortgage rates. With the Federal Reserve Board meeting every six weeks, this is an important question to ask. If your lender does not have a firm understanding of this relationship, they may leave your rate unprotected costing you thousands of dollars over the life of your mortgage.

•6. Do different programs have different interest rates?

Conventional, FHA and VA loans can all carry different rates on a 30-Year fixed mortgage. FHA and VA loans are insured by the Federal Government in the event of defaults. Conventional mortgages are insured by private mortgage insurance companies, if insurance is required. Typically, FHA and VA loans carry a lower rate because the investor views the government backing as less of a risk. While rates are usually different for each program, it may be more important to compare the monthly and overall cost during the life of the loan to determine which program best suits your needs.

•7. Why is an Adjustable Rate Mortgage (ARM) rate lower than a fixed rate mortgage?

An Adjustable Rate Mortgage (ARM) is usually fixed for a specific period of time. The period is typically 6 months, 1 year, 3 years, 5 years or 7 years. The shorter time period the rate is fixed, the lower the interest rate tends to be initially. This is due to the borrower taking the future risk of increasing interest rates. The only instance where this would not be true is when there is an inverted yield curve where short-term rates are higher than long-term rates.

•8. Why are rates higher for different factors such as investment property?

Mortgage interest rates are based on risk-based pricing. Risk-based pricing allows adjustments to par pricing for risk factors such as; FICO scores, loan-to-value percentages, property type(SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc). This allows the investors who lend their money for mortgages to receive additional compensation for taking additional risk. An example is if the borrower encounters a financial hardship, are they more likely to make the payment on the home they live in or the one they rent?

The following policy change was announced from U.S. Bank Home Mortgage, specifically relating to the Correspondent Lending Division’s Underwriting policy for all loan products including FHA, VA and Conventional loans.

Collections, Charge-Offs, Judgments, Garnishments and Liens:

Delinquent credit must be paid off at or prior to closing. This includes taxes, judgments, collections, charged-off accounts, tax liens, mechanics’ liens, and liens that have the potential to affect US Bank’s lien position or diminish the borrower’s equity.

Documentation of the satisfaction of these liabilities, along with verification that there were funds sufficient to satisfy these obligations, must be included in the underwriting file.

Per the US Bank memo, this policy will be effective Monday, October 4, 2010, for all loans submitted for underwriting to a USBHM Underwriting Center, for MI Contact Underwriting and loans submitted for purchase by their Delegated Correspondents.

All collection accounts (including medical collections) and charged-off accounts do not have to be paid off at or prior to closing if the total balance of all accounts combined is $1,000 or less. No minimum monthly payment has to be included in monthly debt unless one has been set up and the borrower has been paying a set amount.

Collection accounts or charged-off accounts that exceed the above $1,000 limit in combined balances do not have to be paid off at or prior to closing, provided all of the following are documented:

1. A strong credit profile
2. Meaningful financial reserves
3. Evidence that the accounts pose no threat to our first mortgage lien

This announcement is not industry wide, but specifically relates to loans delivered to US Bank Home Mortgage through Correspondent Lending. US Bank Home Mortgage is known as one of the more conservative residential lenders, sometimes coming out with guideline changes up to 6 months before other lenders. This memo also doesn’t insinuate that all lenders will change the guidelines they use to underwrite, rather with the tightening of the market, there is possiblility. However, if this does become more prevalent your clients will become frustrated that they didn’t have adequate time to prepare additional cash reserves, you will have to cancel your Phoenix home purchase contracts and your real estate career will suck.

If you’re married and your spouse has recently had a short sale, you may still be able to purchase a home.

For the majority of married couples, their homes are purchased together using joint credit, income and assets. This article will address the following situations; the spouse purchased a home before the couple was married in his/her name, or the spouse purchased a home, qualified on his/her own qualifications and the other spouse disclaimed their interest in the property.

Let’s take a look at an example of what a typical scenario might look like for a typical borrower.

Mr. Smith bought a home in 2002. He was forced to do a short sale in 2008 because he lost his job and could only find employment that paid 50 percent of his previous income. When Mr. Smith purchased his home, he was able to qualify on his own and Mrs. Smith was not included on the loan. Mrs. Smith signed a disclaimer deed at the closing. Mrs. Smith has since graduated from medical school and returned to the workforce. Mr. Smith and Mrs. Smith would like to purchase a new home together. Unfortunately, Mr. Smith’s credit will not allow him to be part of the loan due to the short sale. Even if Mr. Smith’s credit score has rebounded from the effects of the short sale, Mr. Smith still must wait 2-3 years before he can buy using most traditional financing.

Mrs. Smith can qualify for a home on her own even though Mr. Smith had a short sale less than 2 years ago, provided she meets the standard qualification standards. Mrs. Smith would like to purchase the home with a FHA loan. In community property states, such as Arizona, Mrs. Smith can still purchase the home even though the lender will review Mr. Smith’s credit history. However, any additional debts which appear on Mr. Smith’s credit report will have to be included in her qualifying ratios. As long as she can qualify on her income alone, she will be able to purchase a home. Mr. Smith will have to sign a disclaimer deed, relinquishing all of his rights to the property.

Please note: This article was written per Arizona State laws and other states may differ. Please consult your mortgage consultant to discuss the laws and regulations applicable to your state.

Since there are many reasons a homeowner may choose to refinance their Phoenix home mortgage, we’ll take a look at the four most common.

1. Mortgage Rates Drop:

Typically, the most common reason that homeowners refinance their mortgage is to secure a lower interest rate. Interest rate and loan amount determines the total cost that a borrower will pay over the life of the loan. The lower the interest rate, the less the overall cost will be. Interest is calculated on a daily basis and usually paid back to the lender on a monthly basis.

2. Lower Payments:

Lowering a mortgage payment can be achieved by lowering the mortgage rate, lengthening the loan term, combining two or more loans, removing mortgage insurance or a combination of these. 

3. New Mortgage Program:

Refinancing an Adjustable Rate Mortgage (ARM) to a new Fixed Rate Mortgage (FRM), combining a first and second mortgage or paying off a balloon loan are three possible reasons to explore a refinance.

4. Debt Consolidation:

If there is sufficient equity, sometimes paying off consumer debt by combining all debts into one lower monthly mortgage payment can significantly reduce the short-term deficits in a budget. However, it’s important to keep in mind the total cost of that debt by adding it into a 30 year mortgage payment.

Even if you don’t think you can benefit from a refinance, there’s usually no cost to have your mortgage professional review your situation and pass along some money saving tips to help minimize overall interest expense with your liabilities.

_________________

Frequently Asked Refinance Questions:

Q: Do I have to refinance with my current mortgage company?

No, you may choose any company to refinance your mortgage since the new loan will replace the existing mortgage.

Q: Is it easier to refinance with my current mortgage company?

It is possible your current mortgage company may require less documentation, but this could add additional cost or a higher interest rate. Do your homework and shop around to make sure you’re getting the best deal.

Q: Will I automatically qualify if I’ve never made any late payments?

No, you will have to qualify for your new refinance. However, certain programs will allow for reduced documentation like a FHA to FHA Streamline Refinance. The most common problem in the Phoenix market is currently appraised value.

So you’re in the market to purchase a home in Phoenix, Arizona?  You’ve saved your money, but were hoping to find something with a low down payment.  Unfortunately, most of the affordable houses in your price range are unable to be financed with a FHA home loan.  It is beginning to seem like your only option may be Conventional financing, which requires a significantly larger down payment. 

There is another option.  It is possible to take advantage of today’s low interest rates and affordable home prices in Phoenix, while still benefiting from a reasonable down payment.

You can purchase a home, which is owned by mortgage giant Fannie Mae, for as little as 3% down.  Fannie Mae currently owns many homes taken over through the foreclosure process in Arizona.  These homes can be financed through their new HomePath^® program, specifically for Fannie Mae REO properties.  Listed below are some of the highlights. 

HomePath^® Financing Highlights

You can search for Fannie Mae REO’s at in Arizona by clicking here.  Fannie Mae is also offering a 3.5% incentive* for buyers who purchase and close on a Fannie Mae-owned home between January 28 and April 30, 2010.  Buyers purchasing properties listed on this site that are closed within this period may receive up to 3.5% of the final sales price for:

• Closing costs;
• The purchase of new Whirlpool® appliances by Fannie Mae; or
• A mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%.

Our mortgage team works with many Real Estate Professionals that specialize in locating these homes for our borrowers.  Please feel free to contact us for a referral of someone who is qualified to assist you in writing a contract, negotiating terms and obtaining the best long-term strategy for you and your family.  Purchasing a home involves many other aspects than just negotiating a sales price.  It’s very important to know, upfront, how to properly structure your real estate offer upon submitting your contract to Fannie Mae.  Contact us today to begin the process.