Frugal Shopping

WASHINGTON – If you fit the profile – typically buyers with little cash on hand or small-scale investors looking for a deal on a foreclosed house – a little publicized national lending program could be just what you need this fall.

Heres what it offers:

bull; Minimal down payments – 3 percent for buyers who plan to live in the house, 10 percent for investors. Most of your down payment can come from documented gifts from relatives or others with no direct connection to the transaction.

bull; No requirement for an appraisal on the property unless youre applying for additional money to renovate the house. This is crucial because lowball appraisals can be deal-killers, especially when the house needs cosmetic or other repairs.

bull; Generous seller contribution limits of up to 6 percent of the price, effectively reducing the cash youll need to pay closing costs.

bull; No requirement for mortgage insurance coverage, despite your high loan-to-value ratio at purchase.

bull; Credit score minimum of 660 – significantly lower than the 700-plus scores many lenders now demand for conventional loans on favorable terms.

bull; Maximum loan amounts tied to standard conventional loan limits: $729,750 in the highest cost markets, $625,500 in others, and $417,000 everywhere else.

Who is offering such an unusual package of come-ons like this in an era of stringent underwriting requirements? Its Fannie Mae, the mortgage investment giant that got into deep trouble when the housing bubble burst and is now bleeding red ink in prodigious quantities under federal conservatorship.

As a result of its past problems, Fannie is saddled with a bulging portfolio of tens of thousands of foreclosed homes. It needs to sell those houses, is willing to finance their transfer to new owners, and has come up with a program it calls HomePath to do so. In recent weeks, HomePath loans have been rolled out through mortgage brokers and a network of 50 lenders, so its probably available on houses in your area.

The basics on HomePath: The program is restricted to Fannie Mae foreclosure holdings. The full lineup of listings can be viewed state by state at www.HomePath.com. Participating real estate brokers are listed on the same site; Fannie Mae will only entertain offers that come through those brokers, not directly from consumers. Most properties are open to bids from owner-occupant purchasers and investors, but some designated First Look are reserved for bids from owner-occupants during the initial 15 days after listing.

There are two main options with HomePath: Mortgage financing to purchase the house in its current as is condition. And renovation financing, where Fannie loans additional amounts needed for what it describes as light to moderate fix ups, such as a roof repair or replacement of an HVAC system.

Standard HomePath listings are all in move-in condition, according to Fannie. That is, the company has inspected them, performed at least cosmetic repairs as needed, and determined them to be structurally sound with no code violations and all systems in working order. Listings eligible for renovation financing generally require some work to be funded through add-on amounts to the mortgage that are held in escrow by the lender after closing and disbursed as repairs are completed during the succeeding six months. Maximum rehab amount is $30,000 or 20 percent of the projected as completed value of the renovated house.

Interest rates on both options are slightly higher than prevailing conventional or FHA-insured loan rates. For example, Peter Boutell, co-owner of Santa Cruz Home Finance in Santa Cruz, Calif., says that in mid-August, when 30-year fixed rates on owner-occupied home loans dropped to the 43/8 percent range, applicants making less than 20 percent down payments were required to pay mortgage insurance premiums that pushed their effective rate to about 47/8 percent. At the same time, HomePath loans with 5 percent down payments were available at 51/8 percent.

This is an amazing program for people looking for a foreclosure at a low price who dont have big down payment cash, Boutell said in an interview. You cannot buy a fix-up with conventional financing anywhere, he added. Lenders just wont do them.

Are there potential downsides to HomePath? Absolutely. Though Fannie Mae says it owns foreclosed houses in a wide variety of neighborhoods, mortgage brokers say they are more likely to be found in lower- to moderate-priced areas that took deeper hits when the housing market unraveled. Buyers looking for pristine properties with zero defects might not find what they want on the HomePath listing board.

But check it out. Fannies loan terms will be hard to beat.

bull; Write to Ken Harney at PO Box 15281, Chevy Chase, MD 20815 or via e-mail at kenharney@earthlink.net.

2010, Washington Post Writers Group

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Bank of America Refinance Mortgage Rates September Home Loans at Lowest Levels in 2010

Posted on | September 2, 2010 | No Comments

Bank of America refinance mortgage rates are currently at the lowest levels we have seen in quite some time. September home loans are around 4.25% for the 30 year fixed but it is important to remember there will take a great credit score and a low debt to income ratio to have any opportunity to lock into a refinance rate under 4.5%.

Bank of America is currently one of the largest mortgage lenders in the country but it is very important to understand that there are multiple options when it comes to locking into refinance mortgage rates. By doing research online many homeowners will likely find that there are opportunities spread throughout the United States when it comes to mortgage lenders and financial institutions.

The majority of mortgage applications over the last several weeks have been to read finance. Refinance applications have outweighed new home applications almost 4 to 1 over the last month. This comes as no surprise as there are very few incentives for first-time homebuyers as there no longer is a tax credit available from the government.

Author: Mike Garner

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Fraudsters would soon find it difficult to raise multiple loans against the same property.

The Central Electronic Registry (CER), an entity promoted by the National Housing Bank (NHB), will keep track of all mortgages in the home loan market. In future, when a borrower seeks to avail of a loan against a house, the lender will be able to verify from the CER whether anyone has already got charge of the property.

A majority of home loan frauds pertain to borrowers raising multiple loans using forged documents. In some cases, the fraud is perpetrated by the developer who sells an apartment under construction to two different buyers. Earlier this month, DNA had reported about a PIL filed by advocates who raised the issue of flats being sold to multiple buyers as the registration department failed to maintain and update sale deeds.

NHB officials said the fraud also extends to sale/purchase of land. The objective behind the CER was to develop an electronic platform for posting of data and information relating to asset finance like mortgage. It will contain details of property like location, survey number, status (lien or any to any bank), free or securitised to any bank, said RV Verma, executive director, NHB.

The banking sector estimates the size of home loan frauds at over Rs400 crore.

All banks and housing finance companies will provide data on title deeds and home loan borrowers to the CER.

Next time a bank processes a home loan proposal, it will first verify with the central registry if the title deed is clear and not registered in any other entitys name, or if any other bank has taken it as a security.

As of now, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act in India has enabled a provision to set up a CER. It is learnt that nearly 10 banks, mostly in the public sector, have picked up stakes in the CER, which has received a budgetary provision of Rs25 crore from the central government.

While the CER will currently be accessible only by banks and financial institutions, the common public will be able to access the website only after a few months.

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Mortgage rates hit another all-time record low this week.

Rates on 30-year, fixed-rate home loans averaged 4.32 percent with an average 0.7 point this week, down from 4.36 percent last week, according to mortgage giant Freddie Mac. It is the lowest rate for 30-year, fixed-rate mortgages since Freddie Mac began tracking them in 1971.

Rates on 15-year fixed-rate home loans averaged 3.83 percent with an average 0.6 point, down from 3.86 percent a week ago. The rates were lowest since Freddie Mac began tracking them in 1991.

In the Northeast, which includes Connecticut, 30-year, fixed-rate home loans averaged 4.36 percent, with 0.6 point, down slightly from 4.37 percent a week ago. Rates on 15-year-fixed rate residential mortgages in the region averaged 3.87 percent, with 0.6 point, up from 3,72 a week ago.

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