The Real Estate Blog

WASHINGTON, Feb. 1, 2012 – Agriculture Secretary Tom Vilsack today announced that the U.S. Department of Agriculture is launching a pilot program to help rural borrowers refinance their mortgages to reduce their monthly payments. This initiative is part of the Administration's ongoing efforts to help middle class families, create jobs, and strengthen the economy. The Single Family Housing Guaranteed Rural Refinance Pilot Program will operate in 19 states for homeowners who have loans that were made or guaranteed by USDA Rural Development. These states are among those hardest hit by the downturn in the housing market.

"Through initiatives like the one we are announcing today, the Obama Administration is taking aggressive steps to fight for middle class homeowners who have played by the rules and are trying to get ahead," said Vilsack. "This pilot program will help homeowners' to take advantage of historically low interest rates, and by working closely with lenders, we are helping rural homeowners protect one of the most important investments they will ever make."

USDA Rural Development estimates 235,000 homeowners will be eligible to refinance their loans, which is expected to save them considerable time and money. To be eligible under this pilot, borrowers must have made their mortgage payments on time for 12 consecutive months. They do not have to obtain new credit reports, property inspections or home appraisals. Refinanced loans must be at rates below the original interest rate. Terms cannot exceed 30 years. No cash out is permitted to the borrower.

The two-year pilot is open to homeowners in Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina and Tennessee. The performance of the pilot will be reviewed after two years to evaluate whether to continue it, terminate it or make it permanent.

The pilot expands upon USDA's ongoing help for rural homeowners. In 2010, USDA Rural Development established an aggressive modification policy for Guaranteed Loans that helps homeowners who are delinquent on their mortgages. These homeowners can lower their monthly payments through a loan modification that reamortizes their payments over a term of up to 40 years, lowers their interest rate, or both. USDA also has a "Mortgage Recovery Advance" program in which the Department provides guaranteed lenders up to 12 months of mortgage payments on behalf of borrowers who have fallen behind on their payments due to job loss or other hardships.

Allowing rural homeowners in good standing that have home loans that were made or guaranteed by USDA to refinance their homes will bring increased capital to rural America and ease the financial burdens on homeowners. This pilot program will not cost taxpayers additional dollars.

All USDA Rural Development housing loans meet rigorous underwriting standards and are made only to qualified borrowers. These are not subprime loans.

Rural Development's housing loans and grants make a significant difference in the lives of thousands of rural Americans across the nation. These investments boost rural economies and create jobs.

The SFHG Rural Refinance Pilot Program complements President Obama's recent announcement to help responsible homeowners and heal the housing market. The measures the President and USDA are taking will help stabilize communities and help middle class families across the country.

Since taking office, President Obama's Administration has taken historic steps to improve the lives of rural Americans, put people back to work and build thriving economies in rural communities. From proposing the American Jobs Act to establishing the first-ever White House Rural Council – chaired by Agriculture Secretary Tom Vilsack – the President wants the federal government to be the best possible partner for rural businesses and entrepreneurs and for people who want to live, work and raise their families in rural communities.

Want to find out more?  Call me today at 888-456-2640

HARP Mortgage Program Allows Homeowners to Refinance to Current Low Interest Rates.

NEW CHANGES TO HARP 2.0 TO TAKE EFFECT MARCH 2012 SEE BELOW FOR EFFECTIVE UPDATES TO THE PROGRAM

Update: HARP 2.0 debt-to-income requirements have changed. According to a Fannie Mae announcement on December 20th, lenders will not longer have to demonstrate that the borrowers have a “reasonable ability to pay, unless the loan payment increases by 20% or more.” This applies only to loans borrowers do with their current lenders through the manually underwritten Refi Plus system. Loan applications that go through the automated DU system (expected to be updated for HARP 2.0 by mid-March) will have to meet the basic DU 45% maximum debt-to-income requirement.

New guidelines for the Home Affordable Refinance Program (HARP) were released by Fannie Mae and Freddie Mac on November 15th, 2011. The updated guidelines come on the heels of the October 24th announcement by The Federal Housing Finance Agency (FHFA) about expanding HARP. The goal of expanding HARP is to allow borrowers who are upside-down on their homes or who have little equity to refinance at today’s low interest rates. The hope is that this will both stabilize the housing market and boost the overall economy, by putting extra dollars in the pockets of consumers who are likely to spend them.

Approximately 4 million Fannie and Freddie borrowers owe more on their mortgage than their homes are worth. Across the US, nearly 11 million are underwater, or about 22.5% of all outstanding loans, according to CoreLogic, a data provider to mortgage underwriters. About 2.4 million hold less than 5% equity in their homes.

What is HARP ?
HARP allows homeowners facing difficulties refinancing their mortgage through conventional methods to apply for a refinance of their mortgage. A homeowner that is current with their monthly payments but unable to refinance due to a drop in the value is the typical prime candidate for the HARP program. The ultimate goal is to allow a homeowner to do a mortgage refinance for a lower interest rate and overall monthly payment.

Eligibility guidelines for HARP:

• There is no loan-to-value cap in the new HARP, for fixed-rate loans. This is the most significant change of HARP 2.0. Under previous versions of HARP, the LTV could not exceed 125%.
• The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac. Determine if you have a Fannie Mae or Freddie Mac loan by going online (check Fannie; and check Freddie) or by calling 800-7FANNIE or 800-FREDDIE (8 am to 8 pm ET).
• At the time you apply, you are current on your mortgage payments. You can have one 30-day late payment in the past 12 months, but none within the past 6 months.
• The refinance improves the long-term affordability or stability of your loan.

HARP Changes for Lenders and Effects on Borrowers

The following is a summary of key changes found in HARP 2.0. Some key underwriting details are not yet announced, and are expected to be released before March 2012.
MARCH 2012 EXPECTED CHANGES TO HARP 2.0
    1. Eliminationg certain risk-based fees for both borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
    2. Removing the current 125% Loan to Value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac
    3. Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac:
    4. Extending the end date of the HARP program until December 31, 2013 for loans origionally sold to Fannie and Freddie on or before May 31, 2009.

Limited Liability

What's new: A key provision of the new HARP is that it limits lenders' liability in cases of loan default. Essentially, Fannie and Freddie will not force the lender to buy back a non-performing loan.

Effect on you: This change should greatly expand HARP's reach. Lenders will be much more eager to offer HARP loans, where they were previously reluctant. With more lenders participating, you will have an easier time getting a HARP mortgage.

Lender Fees Dropped

What's new: Fees that Fannie and Freddie charge lenders for high LTV loans are being cut.

Effect on you: The reduced fees are passed on to you, making your loan cheaper. If you are financing to a 15-year or 20-year loan, the fees are cut even further.

Credit Score and Income Requirements Relaxed

What's new: As long as your new HARP monthly payment is not more than 20% greater than your current payment, specific credit and income guidelines do not apply. The lender will have to determine that the borrower is an “acceptable credit risk” (and what that means is yet to be determined).

Effect on you: A low credit score or high DTI is not enough to automatically disqualify a borrower. Also, if your family is now a one-income family when it was a two-income family on the original loan, you only have to show proof of one income, as opposed to conventional loans where all borrowers listed on the application must document income.

Underwriting Requirements Relaxed

What's new No. 1: Mortgage Payment History: A HARP lender can approve a loan that has one late mortgage payment in past 12 months, as long as it did not take place in the last six months.

Effect on you: You won't be counted out for a mortgage late, when that could normally eliminate your ability to get refinanced at the lowest rates available. If you have a recent mortgage late, you can still apply for HARP, once you meet the relaxed mortgage late requirements.

What's new No. 2: Relaxed Foreclosure & Bankruptcy rules: Your HARP loan could be approved, regardless of how recently a borrower filed bankruptcy or experienced a foreclosure.

Effect on you: Normally, if you filed for bankruptcy or experienced a foreclosure you would have to wait years before you could successfully refinance.

Occupancy Requirements Relaxed

What's new: Owner Occupancy: HARP loans are no longer restricted only to owner-occupants.

Effect on you: You can now use HARP to refinance your second home or investment property.

Lenders Must Show that a Borrower Benefits

What's new: Lenders must show that the HARP mortgage borrower derives one or more of the following four benefits in the new loan:

1. Reduce the size of the monthly payment

2. Change to a more stable loan product, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage

3. Reduce the interest rate

4. Reduce the loan amortization term (moving to a shorter-term loan)

Relaxed Condominium Requirements

What's new: HARP eligibility used to require that no more than 10% of units in the complex be owned by one person and that no more than 20% of owners in the complex be behind on their HOA dues. These requirements are now removed.

Effect on you: More condo owners will now qualify for HARP. If you own a condo, your qualifying for the HARP program is no longer dependent on your neighbors' finances.

“Condominium owners have perhaps the best reason to be optimistic; lenders are being relieved of the responsibility (for HARP refinance loans only) to ensure that condo projects meet the often strict project approval requirements of Fannie Mae and Freddie Mac,” Citera said. “Borrowers living in condominium projects that have seen a sharp increase in the number of renters, or those that have experienced some level of budgetary stress, will be much more likely to find relief under HARP 2.0 than they have under existing programs (as long as their loans are owned by Fannie or Freddie).”

Hold Your Horses

Although applications may be submitted for new HARP 2.0 mortgages in December, 2011, Bills.com believes the bulk of HARP mortgages will not be approved until March, 2012. Both Fannie and Freddie must update their automated loan underwriting/approval software by March, 2012. Until then, while lenders may approve HARP mortgages by manually underwriting the loans, loans that are manually underwritten expose the lender to greater risk. If a manually underwritten loan defaults, the lender will be required to buy back the loan.

Given the protections that the lender will have once the automated underwriting programs are updated and ready in March, 2012, it seems very likely that most loan originators will wait until March, 2012. Be ready to move forward with an application, once lenders start taking them, but be prepared for a very long process before your loan closes.

Before refinancing, borrowers should know whether their current loan is a recourse or non-recourse loan and also be familiar with their state's anti-deficiency laws. Refinancing a non-recourse loan could expose the borrower to responsibility for a potentially huge financial obligation where no such obligation currently exists.

Recourse, Non-recourse, and Anti-deficiency

In some states, refinancing can remove the consumer protections, called anti-deficiency laws, which protect underwater homeowners who default on their mortgages. Anyone with a non-recourse loan should carefully weigh the decision to turn a non-recourse loan into a recourse loan.

Current Basic HARP Requirements

Not everyone who is underwater will qualify for HARP 2.0. Below is a summary of the basic requirements:

1. The loan must be owned or guaranteed by Fannie Mae or Freddie Mac
2. The loan was sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
3. The loan was not refinanced under HARP previously, unless it is a Fannie Mae loan that was refinanced under HARP from March through May, 2009.
4. The loan’s current loan-to-value (LTV) is greater than 80%.

Avoid Foreclosure & Bankruptcy, Save your Credit, & Walk Away with No debt  & NO Fees

If you owe more on your home than it is worth and you are having a hard time making your mortgage payments, it may be time to short sell. I can sell your home and negotiate the best outcome for you regardless what lender you have and how close you are to foreclosure. I have connections to the top negotiators with all the lenders to give your file the attention you deserve and save your credit from foreclosure or bankruptcy.

IS THIS MY DREAM HOME? If this is your dream home then maybe a modification will benefit you, but consider, a modification only temporarily lowers your interest rate but does not reduce the principle. 95% of modifications end up in foreclosure.

HOW DO I GET A FRESH START? First you need to get rid of the 800 ton gorilla (your mortgage). By doing a short sale your can reduce the impact on your credit and get back into home ownership in as little as 18-24 months.

HOW MUCH IS A SHORT SALE GOING TO COST?  You pay absolutely nothing, no commissions, no closing costs, no back taxes and no repairs.

HOW LONG WILL THIS BE ON MY CREDIT?  A short sale will typically show on your credit for up to 24 months, a foreclosure 5-7 years and bankruptcy is 11 years PLUS!

WILL THE LENDER COME AFTER ME FOR MORE MONEY? If you have not taken any equity out of your property the answer is NO. If you have pulled equity out of your property the lender MAY pursue a deficiency judgement. However, we often negotiate a reduced payment and sometimes at 0% interest.

WHAT LENDERS HAVE YOU WORKED SHORT SALES WITH?  We have build strong and reputable relationships with Aurora, American Servicing Co.,Bank of America, Countrywide, Citi, SPS, First Franklin, Indymac, National City, Wilshire, Wells Fargo & Washington Mutual.

WHY THE ROZANSKYTEAM? Traditional Realtors do not have the lender relationships that we have, my concern is the outcome on your credit and to reduce any possible deficiency amount. I will give you the personal attention and respect you deserve, you are my client and I have a fiduciary responsibility to you.  My goal is to get you qualified for home ownership again so your next home is more affordable.

 Avoid Foreclosure, Save Credit, Walk Away w/ No Debt, No Fees

The Short Payoff Refinance

by The Rozansky Team

jon@rozanskyteam.com (619) 392-1234

Finally!!! You can do a Short Payoff Refinance loan with our standard FHA Loan Programs.

Although the "Short Sale" has become a well known solution for borrowers to avoid foreclosure by selling their home for less than what is owed, the "Short Payoff Refinance" (Short-Pay Refi) is becoming a popular tool for borrowers to retain their home, lower their principle balance and most importantly; lower your monthly payment with a fixed rate FHA insured loan.

~~~What's a Short Pay Refinance?

This process is similar to a short sale but, instead of the property being sold, it is refinanced with a new lender. A Short  Pay Refi is unique in that it allows the borrowers to keep their home, lower their payments and eliminate the upside down equity in their homes by reducing their principal balance.

The transaction itself is a basically a three part process. Negotiations are done by us the broker in conjunction with the borrower and the lien holder. First we need to establish the actual current value of the home. Next, we run the FHA approval on you at the maximum loan to value for that new value and issue an approval. Now, armed with our comps at current market value and our approval, WE enter into equity re-negotiations with the bank/loan servicer for a discount on the current mortgage. Once the bank/loan servicer accepts the offer presented, we can complete the new loan transaction.

THIS IS NOT THE H.O.P.E FOR HOME OWNERS PROGRAM AND DOES NOT CARRY ANY OF THOSE RESTRICTIONS**

~~~Who should get a Short-Payoff Refinance?

For those borrowers that still have decent credit, ficos, income and no mortgage late but due to a decline in the value of their home (owing more than it's worth), a Short-Pay Refi is the perfect solution. This allows the borrowers to put the brakes on before everything gets away from them and spins out of control. After the transaction is complete and the lien holder is paid off, it's up to that lien holder as to how they are going to rate the paid-off mortgage to the credit bureaus. Depending on the lender, it may be filed as: Paid In Full, Settled, Charged-off, Paid for Less than Balance, etc.

~~~Why would the bank/loan servicer agree to a Short-Payoff Refinance and not just foreclose on the property?

Banks/Loan Servicers' books are becoming swamped with REO's, so now they're more open to negotiations than ever.  Remember, foreclosing on a property requires large amounts of realtor commissions, legal fees and then the home is typically sold at a substantial discount off of the fair market value by the bank. The Short-Payoff Refinance allows the loan servicer to avoid a majority of the legal fees, commissions, home maintenance and lets the new lender make its largest loan based on the fair market value. In most cases, a Loan Modification can't solve the problem as many loan servicers are not lenders; a Short-Pay Refi becomes a very powerful alternative. Short-Payoff Refinances put borrowers in better positions than standard loan modifications because aside from lowering the payment, they also lower the principle balance with an FHA insured loan.

 I HAVE NO UPFRONT FEES!!!  I GET PAID WHEN YOUR LOAN IS MODIFIED OR YOU PAY NOTHING!

The Short Payoff Refinance

by The Rozansky Team

jon@rozanskyteam.com (619) 392-1234

Finally!!! You can do a Short Payoff Refinance loan with our standard FHA Loan Programs.

Yes we are doing them and lenders are approving the refinance! They want you to stay in your home!

Ask to see our most recent Short Pay Refinance & Principle Reduction approval!

Although the "Short Sale" has become a well known solution for borrowers to avoid foreclosure by selling their home for less than what is owe, the “Short Payoff Refinance” (Short-Pay Refi) is becoming a popular tool for borrowers to retain their home, lower their principle balance and most importantly; lower your monthly payment with a fixed rate FHA insured loan.

~~~What’s a Short-Payoff Refinance?

This process is similar to a short sale but, instead of the property being sold, it is refinanced with the same or a new lender. A Short-Pay Refi is unique in that it allows the borrowers to keep their home, lower their payments and eliminate the upside down equity in their homes by reducing their principal balance (principle reduction).

The transaction itself is a basically a three part process. Negotiations are done by us the broker in conjunction with the borrower and the lien holder. First we need to establish the actual current value of the home. Next, we run the FHA approval on you at the maximum loan to value for that new value and issue an approval. Now, armed with our comps at current market value and our approval, WE enter into equity re-negotiations with the bank/loan servicer for a discount on the current mortgage. Once the bank/loan servicer accepts the offer presented, we can complete the new loan transaction.

THIS IS NOT THE H.O.P.E FOR HOME OWNERS PROGRAM AND DOES NOT CARRY ANY OF THOSE RESTRICTIONS**

~~~Who should get a Short-Payoff Refinance?

For those borrowers that still have decent credit, ficos, income and no mortgage late but due to a decline in the value of their home (owing more than it’s worth), a Short-Pay Refi is the perfect solution. This allows the borrowers to put the brakes on before everything gets away from them and spins out of control. After the transaction is complete and the lien holder is paid off, it’s up to that lien holder as to how they are going to rate the paid-off mortgage to the credit bureaus. Depending on the lender, it may be filed as: Paid In Full, Settled, Charged-off, Paid for Less than Balance, etc.

~~~Why would the bank/loan servicer agree to a Short-Payoff Refinance and not just foreclose on the property?

Banks/Loan Servicers’ books are becoming swamped with REO’s, so now they’re more open to negotiations than ever. Remember, foreclosing on a property requires large amounts of legal fees and then the home is typically sold at a substantial discount off of the fair market value by the bank. The Short-Payoff Refinance allows the loan servicer to avoid a majority of the legal fees and lets the new lender make its largest loan based on the fair market value. In most cases, a Loan Modification can’t solve the problem as many loan servicers are not lenders; a Short-Pay Refi becomes a very powerful alternative. Short-Payoff Refinances put borrowers in better positions than standard loan modifications because aside from lowering the payment, they also lower the principle balance with an FHA insured loan.

CA DRE # 01807122

I have been negotiating with lenders on short sales, loan modifications, short pay refianances.   In all cases you should always consider these options rather than foreclose.  Ask me about your situation and I will give you good honest advice.  I never charge ANY upfront fees ~ Jon 619-392-1234

How Will A Short Sale Affect My Credit?

A short sale will negatively affect your credit, but not nearly as much as a foreclosure or deed-in-lieu~ read this entire article for details on each alternative.

A short sale simply means that the amount of the mortgage balance owed is greater than the current market value of your home. Homeowners who are in financial difficulties and facing foreclosure often opt for a short sale in order to escape the foreclosure process.

This is precisely the situation now across the United States where the sub prime adjustable rate mortgage mess has caused mass foreclosures and significantly reduced the value of real estate.

A short sale takes place when the lender agrees to accept less than the amount you owe him on your mortgage because you don’t have enough equity to sell the home and pay all the costs of the sale. And make no mistake, the lender must agree or you’re out of luck.

The effect on your credit report

You will suffer much more damage to your credit report with a foreclosure than you will with a short sale. It will also take considerably longer to restore your credit rating once your financial difficulties are resolved. In general, here’s what happens:

For a Foreclosure or Deed-In-Lieu of Foreclosure

- Expect about the same things to take place. Quite often this means a loss of between 200-280 points on your FICO score. A pre-foreclosure FICO of 675 could drop to as low as 395, essentially eliminating you from future credit approvals. It may be as long as three years before you can qualify for another home loan.

For a Short Sale

- Expect to suffer some credit score damage, but nowhere near as much. Loss of FICO points will be around 75-125 and your report will show it listed as a ‘pre-foreclosure in redemption’ which is far less negative. You will most probably be able to secure a new home loan in about a year and a half. In any case, it is a good idea to consult with a lawyer, tax accountant (CPA) or a good real estate agent who is experienced with successful short sale negotiations. These professional may charge you a bit for their services, but failing to have the right counsel could end up costing you a sizable bundle. So don’t consider going it alone. Get the help you need.

Call the Rozansky Team to discuss your options, Jon ~ 619-392-1234 www.rozanskyteam.com