What happens if Fannie Mae and Freddie Mac go under?

What would happen if Fannie Mae and Freddie Mac go under? If Fannie and Freddie were to fail, the real estate market would have a big problem on its hands. Cheap mortgage loans would probably dry and thus causing the real estate values to plummet. If you did want to get a home, the interest rate that you would pay would be a lot higher. Fannie Mae and Freddie Mac buy over half of all mortgage loans originated in the United States. If the government would not let Bear Stearns crash I can't see how they could let these two mortgage giants fail.

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How do you get an FHA loan?

How do you get an FHA loan? It's actually very easy. The majority of mortgage brokers, banks and lenders can arrange an FHA home mortgage for you. FHA allows people to buy homes with lower credit scores. You can even have collection accounts. Ask your loan officer to see if the can pre qualify you. It should not take very long and there should not be a fee to do this. You may also want to ask about the Ameridream gift program. You can get up to a 3% gift of equity with this program so be sure to ask. A seller has the option to pay all of your closing costs as well. So technically you can buy a home with an FHA loan with no money down and and no money out of pocket.

FHA information

When is my mortgage payment due?

When is my mortgage payment due? Your mortgage payment most likely due on the 1st of each month. Most lenders do their accounting with mortgage payments being due on the first. There are a few lenders like World Savings can have their due date on a different day of the month. My old World Savings loan was due on the 15th of the month. Like I said earlier, your payment will most likely be due on the first of the month. It will be late after the 15th of the month and will show up as late on your credit report once you go over 30 days. So the late that is going to be bad for your credit report will show up after 30 days from the due date have passed.

To be on the safe side, just get your payment in on the 1st of each month.

When is my mortgage payment due?

Mortgage interest rates hit the bottom

GetPrequalified.com is making its official statement that this is the bottom of the mortgage interest rates. Rates wont be going any lower. If you have been waiting to refinance your home or buy a home, you may not want to wait any longer. If you are waiting for lower rates, you may be disappointed by getting higher rates in the future.

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Wilmington Finance closes its doors - Another one bites the dust

Wilmington Finance will be closing its doors. Another dead body of the mortgage crisis. Wilmington Finance was known for Alt A and some sub prime products. My guess would be the losses just started to pile up to high.

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You may not be able to use disability income to qualify for a mortgage

On a loan that I was working on for someone, I ran into a bit of a snag when it came time to verify the disability income with Social Security. To be able to count an income stream for conventional financing, you must be able to demonstrate payments for 3 consecutive years. That's fine, but the social security administration will not provide a letter stating that they plan on making these payments out to the beneficiaries. I asked someone there why and I was told that their position is that everyone is rehab able. From this standpoint anyone can get better, therefore no 3 year letter.

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What is Freddie Mac

Freddie Mac stands for the Federal Home Loan Mortgage Corporation or FHLMC. It is a federal controlled organization designed to support the secondary mortgage market. It was originally chartered by Congress to increase the supply of funds that mortgage lenders, banks, mortgage brokers, credit unions and savings and loans to consumers to make home purchases. Freddie Mac was started in 1970, and is a business that buys mortgages from lenders and packages the mortgages into securities and then sells the securities to Wall Street. The proceeds of the sale of the securities is used to issue more loans.

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What is a balloon payment for a mortgage?

A balloon payment would be the amount of money that is due at the end of a loan. Not all loans are 30 years. Some mortgage loans allow you to pay a lower payment for a short period of years with a balance that is due at the end. Typically these types of mortgage loans are 5 to 7 years in length. They differ from adjustable loans in that and adjustable loan will have a rate adjustment at the end of the fixed period versus have the entire balance due like on a balloon payment mortgage.

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What you don't know about Jumbo Loans may kill you

If you are trying to sell a home that would require a jumbo mortgage you may be in for a shock. What most people don't know is that their is a big difference between conforming loans and jumbo loans when it comes to interest rates. Jumbo rates can be as much as 3% higher than conforming loan limits. Some Jumbo mortgage interest rates are 9% or more. This is bad news if you are marketing a luxury home. These higher rates makes the pool of buyers much smaller. The best bet obviously is if they can pay cash. If not, you may need to wait it out or be very patient when trying to find a buyer. It is just going to take longer to get these properties sold. I think most people don't realize how much jumbo mortgage rates have jumped. This is just the banks way of hedging their bets right now. Banks have more exposure when it comes to jumbo loan. With all of the turmoil due to the credit crunch, many lenders are just skid dish now.

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There are no Stated Income Jumbo Loans

I have had two calls this week from self employed people who want stated income jumbo loans. To set the record straight, there aren't any anymore. If you are self employed and want to buy a home, you will have to start reporting your income. I just spoke with a gentleman who needed a refi on a $600,000 mortgage. He had equity in the home for it was worth over $1,500,000. I got his tax returns and he is reporting just over $50,000 in come. This was a well to do individual who was belligerent in his assertion that he should have no problem in getting a loan. Well the truth is the banks don't care who you are anymore, they are going by the book these days. If you don't have documentable income, then no loan for you. Stated income loans help people skirt the issue of declaring income. I don't blame people for wanting to reduce their tax burden, but it is time to pay the piper now.

What is Ameridream?

Ameridream is a non profit company that helps low to moderate income individuals or families by a home by providing down payment assistance. The Ameridream dpa program has been setting the standard for which all other down payment assistance programs strive to be. To get the Ameridream cash assistance, you must find a seller that is willing to participate in the program. The seller pledges money from the proceeds of the sale to the Ameridream foundation. In exchange Ameridream will gift the buyer the down payment needed for the FHA financing. Typically it is 3%.

More info on Ameridream

Is The Real Estate Market Ever Going To Come Back?

May 21, 2008

Is The Real Estate Market Ever Going To Come Back?

I hear it everyday… Will this real estate market ever come back? How long is this going to last? Have we hit the bottom yet? Well, the honest answer is, no one knows for sure. If you were to line up ten educated and seasoned real estate analysts, you’d surely get a 50/50 split in the opinions. Some say we’ve already hit bottom, other’s say we won’t see it until Spring 2009. It certainly seems like the newspapers do all they can to keep a negative spin on current conditions! I recently came across this excerpt from the Wall Street Journal, one of the finest of all newspaper publications. For once, a newspaper, more importantly, the WSJ offers a more positive spin which gives homeowners and consumers hope. Read on…

May 16, 2008 (Wall Street Journal) Home construction turned up unexpectedly in April and showed surprising vigor, making the biggest increase in two years, while building permits also rose, a sign of optimism for the sickly housing sector. Housing starts increased 8.2% to a seasonally adjusted 1.032 million annual rate, driven higher by a surge in apartment buildingconstruction, the Commerce Department said. Starts plunged by a revised 13.8% in March to 954,000. Economists expected April starts to drop by 1.4% to a 934,000-unit annual rate.

Written By: Dan Blew, Propertynut.com (with contribution from the Wall Street Journal)

Realtors beware, your clients down payment could be disappearing

Many people use their home equity lines as down payments. If you are a Realtor you need to be aware that banks are pulling back and canceling many of them. I have had mine canceled in recent days. I would advise you to tell your client to pull the money out now and not when they need it. Because when they need it, it may not be there.

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The best real estate deal if you are buying a home is Ameridream

If you are a low to moderate income buyer and are looking to buy a new home, then you might want to get a gift of equity to buy your home. AmeriDream is a charitable company who is committed to people being able to buy a home who need down payment and closing cost assistance.

More Information

Why it's bad news that millions of home equity lines are bing cancelled

From the previous post I reported on my home equity line of credit or heloc was cancelled by National City. This is bad news for the economy because millions of home owners were tapping there home equity lines to make purchases, buy cars, make home improvements or just go on vacation. With these credit lines no longer available, this only means less money being put into consumer spending and the economy. My guess would be that it will take a few years to get the economy turned around. Hopefully lenders will loosen their lending guidelines which will make it easier for people to get money. This would help.

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National City cancelled my home equity line

Be on the look out for a letter in your mailbox alerting you to the fact that your home equity line has been reduced or canceled. This is my second one that I have received in the last 30 days. The line on my rental property from Washington Mutual was reduced $20,000 and now my line on my home of $60,000 was completely taken away by National City. They may not honor any checks that were written so you need check on that. To answer the question, a bank can do this on a second mortgage? It is definitely in the provisions of their notes to reduce or suspend any credit line.

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LendingTree mortgage files hacked, is your information at risk?

I just read an article that former employees from Lending Tree helped unauthorized mortgage companies hack into its database to steal customer information. This occoured from 2006 to 2008. This just goes to show you how aggressive the industry is for mortgages and what lengths people will go to for a buck. A good mortgage lead can sell for up to $75 or more. We are probably talking about millions of dollars worth of stolen leads.

If you were a LendingTree.com customer during this time you may want to put a fraud alert on your credit report.

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How to Lower your second mortgage at National City

I just spoke with a client of mine who I did a second mortgage for at National City Home Equity. He told me that he paid them $50 to recast his mortgage again after he had already set it. National City heloc second mortgages came with a feature that allowed you to lock it in. He had a home equity line of credit which is typically variable, however they allow you to fix it in on an interest only payment for 7 years. He had locked it in a few years ago and had made it a fixed. He just called them and they are allowing him to drop it again. I had never heard of that. He was able to drop his rate over 3%.

If you have a National City loan and have already fixed it in, you may want to call them again to see about a recasting fee and get a lower rate.

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What is the Ameridream program?

AmeriDream was established in 1999 as a 501(c)(3) charitable group creating home buying opportunities for qualified low to moderate income individuals and families to purchase affordable homes. AmeriDream provides a wide range of programs to benefit the individuals and families its serves including foreclosure prevention, providing financial support through privately-funded down payment assistance and home buying education.

The AmeridDream Downpayment Assistance Program was created to overcome the greatest obstacle to owning a home which is usually the downpayment. The downpayment gift never has to be repaid. The program has helped over 400,000 qualified homebuyers become home owners. AmeriDream is recognized as the most trusted and valued name in the gift assistance arena.

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What's the deal, Wamu cut my credit line

The home equity fairies were at it again. Sadly they cut into my own heloc. I had a home equity line of credit with an original line of $27,500. Wamu just sent me a letter stating they are cutting my line to $8300. Second mortgage companies are positioning themselves against potential future loses. If you have a credit line now, don't count on it being there in the future. There are no guarantees that you will have it in the future. They can do this, it is written into their mortgage notes.

Don't be surprised if you find a letter in your mailbox stating that your line has been cut down. I have a rental property with a line from National City on it. I guess I will be getting a letter from them soon as well.

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