Gulf Coast Associates' Blog: Mortgage Information

Imagine the surprise of many home sellers when they become aware that Fannie Mae, Freddie Mac and most of the major lender guarantors have identified their Metropolitan Statistical Area (MSA) as a declining market. Talk about a kick in the head. Like many across this country, they first had to come to terms with the fact their homes are declining in value. Now, they also must face the situation where many potential home buyers will be penalized if they attempt to buy their homes with conventional mortgage financing.

So, just exactly how do these metropolitan statistical areas get these "declining market" designations? We thought you might find a review of the situation helpful.

Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSEs) and…

Fannie Mae announced today it will be scrapping its extra 5% down payment requirement for properties identified as being located in a declining market. The change will affect conventional, conforming mortgages that the company will purchase or guarantee and is an additional part of the company's recent Keys to Recovery initiative.

The company had been under pressure from both Realtors® and industry insiders alike since it adopted the policy in December, 2007. Marianne Sullivan, one of Fannie Mae's senior vice presidents said "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."

The new policy will take effect June 1,…

Beginning July 14, 2008, FHA will implement a new flexible premium pricing structure that HUD believes will assist more homeowners struggling to keep up with their high-cost subprime adjustable rate mortgages. According to HUD Deputy Secretary Roy A. Bernardi, “fair pricing will allow FHA to reach more troubled homeowners without placing excessive risk on its insurance fund.”

Up to now, FHA had one premium structure that charged borrowers 1.50 percent of the loan balance upfront and .50 percent annually regardless of the borrower’s credit standing. Under the new pricing structure, FHA’s upfront mortgage insurance premium will range from 1.25 percent to 2.25 percent based on borrower credit risk.

The new pricing plan is set to coincide with modifications…

For those of you who follow our blog, you know we try very hard to keep you up to date with all the changes that are occurring in the mortgage lending industry on an ongoing basis. Unfortunately, since around the beginning of March, we have had our hands full trying to keep up with the overwhelming increase in our real estate business due to the fact it was the height of our "season" here in Southwest Florida and business is booming again. Our belief is that what has occurred for us here in our real estate markets this winter will also show up and spread across the rest of the country as we move into summer. At least we hope so!

So, in order to keep you up to date, we have decided to do a synopsis of what has occurred over the last 45 days that should be…

We just wanted to remind folks about the Mortgage Forgiveness Debt Relief Act of 2007, whereby homeowners whose mortgage debt was partly or entirely forgiven during 2007 may be able to claim special tax relief by filling out the "revised" Form 982 and attaching it to their 2007 federal income tax return. Under the new law, taxpayers may exclude mortgage debt forgiven on their principal residence if the balance of their loan was less than $2 million ($1 million for a married person filing a separate return). It applies to mortgage debt forgiven in a mortgage restructuring as well as mortgage debt forgiven in connection with a foreclosure.

The IRS is "urging people with mortgage problems to take full advantage of this valuable tax relief" and has provided…

Lots of folks are considering refinancing their current home loans in this falling interest rate environment. The problem is things have changed within the lending industry since many borrowers got their original mortgage or refinanced the last time rates fell. What used to be a simple process has now turned into a journey filled with many roadblocks. The fallout from the subprime mess has brought about all sorts of changes including new FICO score requirements, declining market penalties and the loss of many types of available loan programs. It almost seems like for everything the industry or the government has tried to do to improve things, more new changes occur that set the process back even further.

The latest problem revolves around those…

In response to the new conforming loan limit requirements included in the Economic Stimulus Package signed into law last month, HUD has released it revised county by county median property prices today. Under the Stimulus Package's guidelines, HUD was directed to re-evaluate its median property prices in order to determine the new maximum conforming loan limits for loans originated between July 1, 2007 and December 31, 2008. The actual FHA and Fannie/Freddie conforming loan limits for each county are based upon 125% of these revised median property prices. Some counties, designated as high cost areas, received their new limits based on 175% of the revised median home prices.

So, all counties across the country now have a new FHA conforming loan amount…

On Friday, February, 29th Judge Lawrence K. Karlton of the United States District Court for the Eastern District of California granted a motion for summary judgment for the Nehemiah Corporation of America for relief against HUD's rule to ban private seller paid down payment assistance programs as proposed in the “Standards for Mortgagor’s Investment in Mortgaged Property” regulation published October 1, 2007. In his ruling, Judge Karlton said "HUD failed to supply a reasoned analysis for its decision and didn't consider reasonable alternatives". The ruling permanently sets aside the final standard issued by HUD, remands the matter back to HUD for further agency actions consistent with the courts findings and disqualifies HUD Secretary Jackson from…