Mortgage Information

Keep up with financial news and mortgage information by following our blog. We will be releasing information about government programs, rate trends, purchases and refinancing.

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Who Can Get a Loan Through the Home Affordable Refinance Program?

Refinancing when the value of your home has declined.  Many people have heard of the Home Affordable Refinance Program but have no idea what it is or if they qualify. With home values declining over the past several years many home owners have been left in difficult situations. They need to refinance but have been unable to do so because their Loan to Value (what is owed vs. the value of the home) is too high. When this happens good, hard working people that pay their mortgage on time, are left unable to complete a necessary refinance.

The HARP loan program was created to help people in this situation. For example a home may have been appraised at $250,000 in 2005 with a home loan of $200,000 (80% Loan to Value) but now that same home is only worth $210,000 making the Loan to Value 95%. Since the Loan to Value (LTV) is higher many lenders may be unwilling to refinance the loan because a higher LTV represents a greater risk to the lender. In this situation the HARP loan program is able to step in.

HARP Loan Eligibility Requirements

1. The current home loan must be guaranteed by Freddie Mac or Fannie Mae.

2. This must be the first time refinancing through the Home Affordable Refinance Program.

3. The current mortgage loan needs to have been sold to Freddie Mac or Fannie Mae prior to May 31, 2009. If you took out a home loan after this time you would not qualify.

4. The Loan to Value must be greater than 80%. If your LTV is under 80% you should speak with a mortgage lender about a conventional refinance.

5. The loan must be current with no late payments during the past twelve months. This is extremely important. If you are current now but think it will be hard to pay on time in the next couple of months contact a mortgage lender immediately. If you wait until you have missed a payment it will be too late.

If you meet all of these guidelines you should contact some HARP 2.0 lenders to further discuss your lending needs and eligibility. They will go over your options with you to determine if you qualify for a HARP loan and if that is the best refinance option for you. If you are not eligible for this program there may be another government mortgage program to assist you such as the FHA loan refinance program. FHA Streamline offers the same easy refinancing as HARP loans but for FHA insured mortgages.

Simply because a loan program is available does not mean that is the best solution for your individual needs. If you are trying to take advantage of the mortgage rate trend, a mortgage lender works hard to get you the lowest possible mortgage rates and terms so that you can save the most money.

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How to Use a 20 Year Mortgage to Refinance for Retirement

The most common term for a homeowner’s mortgage is 30 years. This is because it offers the lowest monthly payment of any term. However if you are planning for retirement around 65, your 30 year mortgage may overlap. If you do not want to make payments on your home when you retire you would have to get into a 30 year mortgage by 35 years of age.  This is not the only option though, you can refinance into a lower term.

20 Year Mortgage for First Time Home Buyers

Getting into a mortgage by 35 could be a problem for many because of strict lending requirements. Also with a shaky real estate market, the investment scares many first time home buyers. The option of buying later is always available, but first time home buyers may have a hard time qualifying for a 20 year mortgage. The best mortgage term available for a first time home buyer is often the 30 year mortgage. So getting into a 30 year mortgage later on in life still leaves the option of refinancing to a shorter term.

Refinancing by 45 Years Old

If you are planning on retiring at 65 and want to be mortgage free, you could refinance with a 20 year mortgage at 45 years old. Even if your 30 year mortgage has only been paid off for 5 years, a refinance to a shorter term is possible. By using a 20 year mortgage to refinance you can cut time off your term, preparing for retirement. Also, you will only have a slightly higher monthly payment because the interest will be less.

Although a 30 year mortgage is a great loan for someone who has never bought a house, refinancing is inevitable if you want to save money. With such a long term the bank is charging more interest. Refinancing your home will utilize your newly gained credit, which means you will receive a better rate. Also, if current mortgage rates are at an all time low when you refinance, you will save money on your loan. The 10 year and 15 year option can be viable solutions for a refinance but they have higher qualifications to meet. A 20 year mortgage can easily be obtained in a refinance if you have been paying your mortgage payments on time.

Planning for retirement is important when it comes to paying your mortgage. If you have a monthly home payment to make, retiring may cause you to default. Looking into the option of refinancing at a lower rate is your best bet of saving money and paying your home off on time for retirement. After all, if you save money in the long run on your home, you will have more money for retirement. As always, refinance lenders will offer you the best information about terms and refinancing. They can also notify you of government assisted programs which could be a better option for retiring by 65.

With housing market trends being how they are, now is the time to take control of your mortgage. Prepare for retirement with a refinance and live happy.

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How to Keep Jumbo Loan Payments Low

Owning a home is part of the American dream. Most families work hard to make buying a home a priority and usually couples do not start out in the home of their dreams. People typically buy what is referred to as a starter home then as their income grows they are able to afford to buy a home with everything on their “check list”. Getting to the point where you can buy the home you have always dreamed of is exciting. Walking through the home looking at high end finish work and expansive rooms is thrilling. The challenge for many people is finding a mortgage loan option that can support their dreams.

Working with a mortgage banker experienced in providing Jumbo Loans can help. Loan amounts over $417,000 (higher in some areas) are typically considered jumbo loans. Mortgage rates on jumbo loans are different than conventional loans and a skilled mortgage lender can help you navigate the approval process to help you find the ideal loan solution.

When purchasing a home, and applying for a mortgage loan to buy it, payment is often a concern. Families need a mortgage payment that fits within their monthly budget.

3 Things that Directly Impact Your Monthly Payments

1. Loan Amount - A more expensive home will have a larger loan amount unless you can make a large down payment. The higher your down payment – the lower your monthly mortgage payment.

2. Interest Rate - Rate can greatly impact your monthly mortgage payment. On larger loan amounts a half percent can make a big difference. For example a $650,000 at 6% over 30 years has a payment of $3,897 principal and interest per month. That same loan at 5.5% has a payment of $3,690. That is a savings of over $200 per month by simply lowering your rate by half a percent!

3. Term - The length of a loan can also make a huge difference in monthly payment. Borrowers that have extra money may want to have a 15 year loan in order to pay off a home sooner. For families that want to buy their dream home without tightening the budget there are 40 year terms available. In the scenario above the term was for 30 years. If the term was changed to 40 years the payment goes down to $3,352 at 5.5%. That is $500 less than the original quote!

By extending the loan term families can often afford the home of their dreams without stretching their monthly budget. Having all of your money go toward your home can leave people discouraged as disposable spending goes out the window. Jumbo mortgage lenders experienced in providing Jumbo Loans can help by finding the lowest mortgage rates and longest loan term in order to keep your monthly mortgage payment down.

There are ways to buy your dream home today and a good place to start is by talking to a mortgage lender. Discuss mortgage loan options now so that when you begin your home search you can confidently make an offer – knowing where your monthly mortgage payment will end up. They can also tell you if you are eligible for a FHA mortgage loan.

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Fate of Housing Market Remains Tied to Jobs

Despite numerous efforts by the Federal Reserve to jump start the housing market with low refinancing rates, the prospects of a sustained and strong housing recovery remain inexorably tied to public and private sector job growth.

Like many other industries, the housing market performs at its best when all economic indicators are trending towards sustainability. The ideal environment for a thriving housing market would be when unemployment is low, interest rates are determined by the market and inflation keeps steady with growth.

For this reason, it remains highly dubious that the Federal Reserve’s policies alone will be able to generate the kind of recovery that Americans have been looking for.

It’s a bit of a chicken and egg scenario when you stop to think about it. Politicians are looking to the housing market to stimulate the economy and housing analysts are looking for economic growth to stimulate the housing market.

Some experts are suggesting that the greatest impediment to a sharper increase in housing sales is more psychological than anything else. Refinancing rates have fluctuated over the years all the way from a high of 14 percent to around 3.41 percent, which is where they are now.

People have been willing to buy houses at every point across that spectrum, but they tend to not want to buy when they are fearful of the future. If consumers feel good about where they are financially, then that begins to be reflected in the marketplace.

Economists have called this phenomenon the ‘wealth effect.’ The following question can therefore be asked: what might cause people to feel as if they are wealthier. Tax credits have traditionally been the answer for economists with a conservative perspective.

But, of course, consumer sentiment can only take the economy so far. So what, then, is the proper solution to creating jobs that will help drive the housing market and improve the recovery?

The solutions to this question are as varied and divergent as they could possibly be. John Maynard Keynes, who was arguably the most influential economist of the 20th century, believed strongly in government intervention during economic downturns.

He was once reported to have said that if the economy is in a dire condition “The government should pay people to dig holes in the ground and then fill them up.” While this might seem like an incredibly banal profession and a preposterous misallocation of human time and energy, the point Keynes was trying to make is simple. It doesn't matter what people are doing so long as the government is working to create jobs.

Even more than half a century after his death, these ideas still have traction and can be seen at work as policy makers look for new solutions to bolster employment. What’s more interesting is that their reach doesn't necessarily break down along ideological lines. Both republicans and democrats have agreed to measures for creating new jobs by expanding the scope of government.

The latest high profile proposal for increasing employment by creating public sector jobs was the American Jobs Act proposed by President Obama. The plan contained a series of proposals to appropriate government funds to hire workers to rebuild the nation’s crumbling infrastructure.

Though many of the ideas contained within the American Jobs Act have enjoyed bipartisan support, it still remains shy of the majority support that it needs in order to pass.

Lately, homeowners taking advantage of a refinance home mortgage with a low term such as 10 year mortgages is not likely. This is largely based on the need for a low monthly payment and cold hard cash.

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Becoming a Part of the 2012 Refinance Boom

While first time home buyers are out shopping for decently priced homes, homeowners are looking for relief. After the recent real estate market crash and overall economic downturn, many homeowners are stuck with a high loan to value amount (LTV), a high mortgage rate and not a lot of cash. In 2012 however, many homeowners have found their relief in the form of a refinance. With mortgage rates dropping to all time lows and government programs being created to make eligibility easier for struggling homeowners, the time to refinance is now. Are you going to become a part of the 2012 refinance boom?

All Time Low Mortgage Rates

Recently mortgage rates have hit the bottom. Being lower than they have for over a decade, the new lower mortgage rates are enticing many homeowners to look into refinance. This new rate trend is also helping to bring the mortgage industry back to life. Not only are borrowers seeing a benefit from the new rates but lenders are as well. With homeowners looking to utilize new rates and government mortgage products available for a refinance, mortgage lenders are seeing more business coming through the door.

Government Mortgage Programs

Recently the government has created a couple mortgage programs to assist with refinances. The Home Affordable Refinance Program and the FHA Streamline Refinance Program are two very well known, and newly created, government programs. Both were designed to assist homeowners who need a refinance but may not qualify because of a high LTV.

The HARP program, now known as HARP 2.0, was created to help Fannie Mae and Freddie Mac owned mortgage notes qualify for refinancing. For homeowners who do not have a Fannie Mae or Freddie Mac owned mortgage note and do not qualify for the HARP program, there is the FHA Streamline Refinance program. This FHA refinance, unlike other FHA loans, does not require an appraisal. It allows a homeowner who has an FHA loan with a high LTV to refinance with a new lower rate and not many questions.

Although these two programs are for Fannie Mae, Freddie Mac and FHA loans, they cover the main majority of homeowners who need a refinance. This is why 2012 is the year of the refinance boom. With all time low mortgage rates and government assistance in the form of new programs, homeowners are taking advantage. Also, as programs become more lenient on requirements more homeowners are utilizing them.

The future holds many changes for the mortgage industry. If you are not able to qualify for one of these two government mortgage programs, there are other options and more to come. Speaking with a mortgage banker is the best way to stay up to date with new programs and available options. They will have the best understanding of new programs and your situation. Also, if you plan to utilize a FHA refinancing be sure to speak with an FHA approved lender.

Unfortunately there are not any special refinance programs for veterans but speaking with VA lenders could be the best way to receive information about a VA refinance.

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New Regulations Aim to Shield Mortgage Banks from Lawsuits

With financial regulators poised to complete a new set of mortgage rules, banks will soon enjoy protection from lawsuits by homeowners.

Regulators pushing the new proposals argue that it will benefit the housing market. Their theory is that by shielding mortgage banks from possible litigation, it will help incentivize them to create greater quality home loans.

Different groups within the financial industry are concerned about the new rules for different reasons. Some real estate agents in Nova Scotia argue that the new regulations impede growth in the housing sector by burdening creditors with too many rules.

Others are worried that the new rules shielding mortgage banks from lawsuits strip homeowners of a powerful safeguard and open the doors to mortgage fraud. After all, many financial analysts have credited the wide range of abuses in the financial markets for generating the housing bust in the first place. Industries rarely get broad protection from consumer lawsuits, which make these new rules somewhat unprecedented.

But when lawmakers are forced to make difficult decisions, the results don’t always comport with what may be popular in the short term. According to Sheila C. Bair, a senior adviser to the Pew Charitable Trusts, “A lot of bad things are done in the name of expanding access to credit, as we found out.”

The new rules are coming in part due to the Dodd-Frank Act, which instituted sweeping reform on the financial markets and was signed into law by President Obama in 2010. When Congress was working with the White House to pass Dodd-Frank, their goal was to generate legislation that would help repair the financial sector and simultaneously make a second collapse less likely.

To help with the recovery efforts, one of the mandates contained in Dodd-Frank was that loans be more affordable. But banking institutions voiced concerns that they would be open to lawsuits if the mortgages did not meet the standards.

In response to those concerns, lawmakers took action to help construct a specific type of mortgage that would have legal protections for the institution issuing the loan. These loans came to be called “qualified mortgages.” Their function is to make it very difficult for consumers to bring lawsuits against the banks in the event that they end up losing their home in a mortgage foreclosure.  

Banks are making a strong push on Capitol Hill to broaden the availability of “qualified mortgages” to prospective homeowners with less than perfect credit. And for obvious reasons, they also want the legal shield protecting them from lawsuits to be even stronger.

Of course, large banks are no strangers to lawsuits and numerous mortgage banks have faced an onslaught of litigation in recent months over financial practices that were in place prior to the financial collapse in 2008.

It was only this past February that the five largest mortgage banks reached a $26 billion dollar settlement with the government over mortgage foreclosure abuses.

As always, it is recommended to deal with a direct lender that is from a smaller sized bank. HARP loans are continuing to help many Americans refinance their homes, and it would not be good to miss out on your own mortgage refinance.

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Does the Increased Use of Veteran Loans Dictate New Legislation?

VA loans have been helping veterans of the United States for almost 7 decades. Offering some of the best benefits in mortgage, these loans are very sought out by military veterans. Now with recent changes to legislation, this Veteran Affairs mortgage program could be offering more benefit to the families of veterans. We doubt the change is stemming from the need for an update but instead has been the result of a recent public relations campaign.

VA loans have been seeing an increase in use this past couple years. Home buyer participation in the government mortgage program has grown by almost 170% over the past few years. After the real estate market crashed, many homeowners sought out different mortgage options. This government insured loan offers no down payment without private mortgage insurance (PMI). With lenders demanding a down payment for almost all borrowers over the past few years, the VA program was one of the only options which did not demand one. These benefits, along with lower closing costs, have made the program more desirable since the newly increased lending requirements. Could the increase in use be the reason for new legislation?

Some of the recent legislation changes to VA loans have been to benefit veteran families that were exposed to contamination. For around 30 years, families living in Camp Lejeune were exposed to well water contamination in South Carolina. New changes to the veteran loan program will help these victims who fall ill due to the contamination.

Other changes to the program will be to benefit surviving military spouses, veterans with disabilities, single parents, veterans in expensive areas and those seeking alternative loan terms. The program was due for changes that benefit veteran families and those with special needs. With changes to who can receive VA assistance, including requirements and qualifications, and an increased amount of options available, the program will become a greater benefit to Americans. Serving more than 18 million veterans over the past 70 years, the newly made changes should increase usage of this government program that has already assisted so many.

If you served in the United States military you could be eligible for a VA loan. This is a great option for anyone who is eligible, whether refinancing or purchasing. Newly changed legislation could make it easier for you to qualify as well. As always, when considering a veteran loan, speaking with mortgage bankers who are also VA lenders insures you receive some of the most up to date information about the program along with any changes that may benefit you. They can also tell you if the program is not the right option for your situation.

If you are looking for a home purchase loan you may want to take a look at the VA loan requirements.

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What is a Rate Lock When Purchasing or Refinancing a Home?

Mortgage rates change quickly, often times daily. When someone is in the market to purchase or refinance a home, they are often concerned with getting the lowest rate possible. However, the mortgage loan process can take a little while to complete. With a rate lock the mortgage lender is agreeing to hold the rate and points earned at the same amount for a period of time. Usually just enough time to get the loan completed.

Floating and Locked In Rates

Lenders will often offer different options when locking in rates. When rates or points are not locked in, they will be considered floating. If the borrower locks in the interest rate but not the points, the lender may charge more points at a later time. However, there is also the chance the points for that interest rate drop, at which time the borrower may be allowed to lock in the points. If both the interest and the points are floating then they borrower can expect to pay more if either percent rises.

Rate Lock While Purchasing

If you are planning on purchasing a home, locking in a low rate can save you money for upgrades on your new purchase. First time home buyers can utilize the money they save from locking in a rate to buy furnishings and other first time home buying needs. Veteran real estate buyers can go on vacation with their added savings.

Rate Lock While Refinancing

Refinancing your home is all about the mortgage rate to many homeowners, which is why a rate lock is so important. If you have been tracking trends, you stand a good chance of locking in at the lowest possible amount. By locking in at the right moment, a person refinance their property can save money and not worry about which way rates go.

Losing Your Locked In Rate

There are times when a lender may not be able to honor the locked in rate. This may happen when there is a problem in processing and the rate lock goes beyond its expiration. Some locks allow for 30 days, and others for 60 days. However, there is often a point difference based on the term of the lock. If the term expires, the lender may not be able to honor the rate because they can no longer sell the loan to their investors. When a rate lock agreement is entered by the lender, they will often have a similar agreement with investors to buy the loan at the locked in rate. Once the agreement has passed the expiration date, there is not much a lender can do.

A rate lock is often the best option when a borrower believes rates are at their lowest. Neither the mortgage lender nor the borrower knows what is best, but keeping up to date with mortgage rate trends can help to make better decisions. If a lock has occurred and rates drop, it is up to the home loan lender to honor the new lower percent. Speaking with a mortgage banker is often a good way to track rates and available options.

Lock in your FHA Streamline loan today.

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What the Future Holds for the Real-Estate Market in 2013

In a year of both promise and setbacks, industry analysts lead the way in predicting what will transpire in the real estate market for 2013 and beyond.

According to market experts, stability in the residential real-estate market is likely to continue for the rest of the year and into the next year as growth rates remain low.

There are a number of reasons why it seems likely that the market will remain stable continuing into the next year. With the economic downturn still casting its effect across the world, consumer confidence remains low as the rising cost of goods keeps overall spending down.

The jobless rate fell from 7.9 to 7.7 percent, though not necessarily for the right reasons. Many Americans simply stopped looking for employment and withdrew from the workforce thereby artificially lowering the rate beyond what it would be if they were counted.

So, even though record low refinancing rates are spurring new home sales, there is a multiplicity of outside forces which are continuing to keep growth rates down. Along with economic indicators, the conclusion of the past presidential election is already beginning to stabilize market forces and have an effect on investor confidence.

As the dust begins to settle from the past presidential election, much of the veil of uncertainty which has shrouded the financial markets has been scaled back. Fed Chairman Bernanke will continue to lead the Federal Reserve for at least another two years and a renewed sense of bipartisanship has gone into effect in Washington.

With the re-election of President Obama, old political rivalries between the democratic and republican parties are being set aside to form a compromise to help avoid the so called “fiscal cliff.” President Obama campaigned on increasing taxes on the wealthy to help pay down the deficit.

This plan has been widely criticized by the leadership of the Republican Party many of whom have signed Grover Norquist’s anti-tax pledge. Now, some republicans are beginning to have second thoughts on the pledge as they do not wish to be viewed as culpable for another breakdown in negotiations over the tax talks. Lindsey Graham, a United States Senator from South Carolina, was among the first of the defectors.

“When you talk about eliminating deductions and tax credits for the few, at the expense of the many, I think over time the Republican party’s position is going to shift. It needs to, quite frankly, because we are $16 trillion in debt,” said Graham.

In exchange for an increase on taxes for the wealthy, Senator Graham wants to see democrats and republicans work together on entitlement reform as part of the larger compromise.

“I’m willing to move my party, or try to, on the tax issue. I need someone on the Democratic side being willing to move their party on structural changes to entitlements,” he said.

House Speaker John Boehner has already conceded that taxes will go up for the wealthiest Americans as part of the larger deal. Lawmakers have until the end of the year to finalize the deal before an automatic tax increase on all Americans goes into effect and threatens to undermine the future of the economic recovery.

Although the HARP 2.0 program was the star of 2012, FHA lenders will find themselves busy in 2013 with new home purchases.

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Why are 30 Year Mortgages the Most Common Term Choice for Home Loans?

If you have purchased a home or are looking into buying one you will hear “rate and term” a lot. Rate is the mortgage rate you are receiving your home loan at. Term is the length of time your loan’s payments are split between. When it comes to rate and term, the most common choice is a 30 year mortgage.

Although the loan is at a higher rate than any other term, the monthly payments are lower because they are spread throughout a longer period of time. This is probably the main reason for many homeowners decision to go with a 30 year mortgage. However, that is not the only reason why 30 year fixed mortgages are so popular.

Qualifying for a First Time Home Buyers Loan Many first time home buyers go with 30 year mortgages because it is easier to qualify for.

Buying Up to a More Expensive Home The 30 year fixed mortgage allows you to purchase a more expensive home with easier qualifications.

They Offer a Better Tax Write Off With a 30 year term the interest will be higher than any other term, this creates a larger tax write off.

Fixed and Adjustable Rate Mortgages

30 year mortgages come with either a fixed rate or adjustable rate. If mortgage rates are very low, many times homeowners will lock in the low rate with a 30 year fixed mortgage. Going with a fixed rate offers stability because the rate will not be changed during the payment process. Adjustable rate mortgages usually start at a low rate, but can adjust over time to a very high rate. This makes an ARM unpredictable and undesired.

Downside of 30 Year Mortgages

It may be the most popular home loan for any borrower but there are downsides to the 30 year term. As said before the rate is higher than any other term. This means the borrower is paying more towards interest every month than if they chose a 25, 20, 15 or even 10 year mortgage. Other than that there really are no other downsides to a 30 year mortgage. The better choice would be a shorter term however you will be paying more in taxes every year anyway.

Many borrowers, from first time home buyers to homeowners looking for a refinance, choose to go with a 30 year mortgage because of its dependability. This rate and term is stable for a very long time and often offers pre pay options. This is another reason why it is the most common choice for home loan terms. Not only is it easy to get and easy to maintain, the options for paying off these loans are much better than others. That means from the beginning of a homeowners mortgage to the end, they will have a loan that allows them to relax.

If you are interested in a 30 year mortgage you may want to look into an FHA home loan for easier qualifications. If you are a military veteran you should also take a look at the VA mortgage requirements.

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Chinese Investment Provides Much Needed Relief for U.S. Housing Market

This mortgage information is brought to you by Direct Your Own Loan.

In what constitutes yet another piece of evidence of increased globalization, foreign investment is helping to rebuild the United State’s housing market.

When many Americans think of China they may think of low-priced imported goods or outsourcing. Some may be surprised to learn that China is actually one of the largest foreign investors in U.S. real estate.

In what has been a growing trend over the years, both private and public Chinese investors have been ramping up investment dollars into the U.S. housing market. Of the $82 billion in foreign money that has been invested in the United States real estate market, China has contributed $7 billion into U.S. housing. They are the second largest foreign investor in U.S. real estate aside from Canada.

Linda Chang, a California realtor who works in the areas around San Marino and Pasadena, credits investment from Chinese companies for creating a resurgent housing market in her area.

“It’s been fantastic for the U.S. housing market because we have not suffered as other communities have. In fact, our property values have increased,” said Chang. Of course, public and private investors from China often have different reasons for wanting to acquire homeownership in the United States. For some, the investment is pure business savvy. For others, their reasons may be a bit more personal.

Chang believes that there is a certain amount of prestige and status that comes with owning foreign properties. Like owning a Swiss watch or a luxury vehicle, foreign real estate is a status symbol which can be shown off to friends and relatives. According to her, this is one of the draws that has been leading wealthy Chinese investors to invest in American properties.

Chang continues: “Most Chinese like to own a Mercedes … it doesn't matter whether a Mercedes is a good car or not. It’s just showing their status in the community, so owning a foreign house is pretty much a prestigious status in China, so they’re proud to tell their friends: ‘Hey, I own a house overseas.’”

U.S. real estate brokers would do well to take notice of the sheer buying power that Chinese investment represents. As China continues to make serious strides in becoming the next world superpower, it has amassed a whopping 1 million millionaires. And nearly half of them are interested in investing in the United States.

Xinyuan Real Estate Co. is one example of a Chinese company looking to do business in the United States. They are but one of the many Chinese companies purchasing and developing residential condominium buildings in New York. Their hope is to later sell these units to Chinese investors who are looking to make money by renting out the properties.

Of course, cross national real estate investment is just one of the many ways that the continued economic interdependence between nations is playing out on the global stage. Another example would be how the United State’s economic fate hinges partly on how Europe is able to handle its debt crisis.

In an increasingly globalized world where the boundaries between nations slowly mean less and less, one can only imagine what this will all mean in the long run and how it will affect purchase loans.

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DOJ Sues Bank of America for its Alleged Home Mortgage “Hustle”

Bank of America was sued in Federal Court this past Wednesday by the Department of Justice over its loan implementation process that was known internally as the“Hustle.” The DOJ alleges that Fannie Mae and Freddie Mac lost over $1 billion dollars because of defaulted home loans from Bank of America that were puffed up to look more secure than they actually were.

According to the lawsuit, Bank of America continued the home mortgage program known as the “Hustle” to process loans at high speeds without safeguards to ensure that the loans weren’t needlessly risky. The Hustle was originally developed by Countrywide but was later continued under Bank of America when it acquired Countrywide in 2008.

Christy L. Romero, the Special Inspector General for the Troubled Asset Relief Program, said,“The complaint filed today alleges serious and significant misrepresentations that Bank of America made before and during the time taxpayers invested $45 billion in TARP funds in the bank. SIGTARP and its law enforcement partners will investigate allegations of wrongdoing by TARP recipients; particularly conduct that resulted in substantial losses to the government and taxpayers.”

Rebecca Mairone, who was the Chief Operating Officer at Countrywide Financial, is being charged alongside Greg Lumsden, president of the lending division. The suit alleges that Mairone put into motion the “Hustle” that put out the risky mortgages which were later acquired by Fannie and Freddie. Mairone now works in home lending at JP Morgan Chase.

Countrywide began the Hustle in 2007 just as home default rates were rising and Fannie Mae and Freddie Mac were increasing regulations on purchase requirements for a home loan. In its desire to maintain the high speed at which home mortgage loans were being processed, certain quality control “toll gates” were removed.

For example, underwriters were replaced with inexperienced clerks or loan processors. Compliance specialists were also removed even though their job was supposedly to ensure that all of the conditions attached to the approval of a loan are satisfied.

Financial penalties for risky home loans were also scaled back in an effort to maintain the rate at which home mortgage loans were being processed.

Chief Managers in Countrywide’s Full Spectrum Lending Division were repeatedly warned that the shortcuts being put in place by “Hustle” could lead to disastrous results. By early 2008, the defect rate of mortgages in the company was at 37%. Other pre-funding quality revue showed that the defect rate was climbing to nearly 70%.

Countrywide didn’t reveal that it had been purchasing large volumes of fraudulent or otherwise defective loans and instead concealed this information to proceed with the Hustle. Moreover, Countrywide gave a one-time bonus to its quality control personnel to reassess the defect rate which was then lowered to 13%.

No criminal charges have been filed against either Mairone, Lumsden or any of the affiliates of the two mortgage banks though the suit alleges that the nature of the fraud was “spectacularly brazen in scope.”

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How to Get a VA Loan and Receive Your Benefits

Step by step instructions for receiving a benefit that you have earned.

There are millions of people that have bravely and courageously served our country by joining the US armed forces and entering our military. Soldiers sacrifice their temporary freedom, ability to be with family and live as they please, to preserve our nations freedom both now and in the future. Soldiers fight for those who cannot fight for themselves – both at home and abroad. We owe these men and women a great deal of gratitude. If you are one – we thank you. Due to their service many will qualify for a VA loan guarantee and be eligible for a VA home loan. If you have served in our countries military here are the steps to receive your VA loan benefit.

4 Steps to Receiving VA Loan Benefits

1. Request a copy of your DD Form 214 (Report of Separation Form) from the military. You can request a copy from the National Archives by clicking here.

2. Obtain a Certificate of Eligibility. You can do so by visiting this website or calling 1-888-768-2132. Your VA approved lender may be able to retrieve the form for you through their online resources. If you do not currently have a certificate – ask if they can help.

3. Speak with a VA approved mortgage lender to discuss current mortgage rates and loan options and begin the application.

4. Prepare your income documentation including two recent pay stubs, two years W2s and tax returns for lender review. This will help them determine what size of loan you qualify for.

The VA loan guarantee is the governments way of insuring a portion of your loan so that the private lender (the business actually lending you the money) does not take on all the risk of your loan. It’s as if the government is saying “you believed in us, so now we believe in you and will insure your credit worthiness and ability to repay your loan”.

It is important to note that just because you qualify for the loan guarantee you do not automatically qualify for a VA mortgage loan. You still need to go through the approval process which entails a credit, income and asset review. Fortunately VA mortgage lenders that specializes in these government mortgage loans can walk you through the process. As a Veteran you earned every penny of your loan guarantee so start the process today and enjoy the benefit you deserve.

If for some reason you do not meet VA loan requirements there are other government home loans that may be available for you. The Federal Housing Administration offers FHA loans with easy qualification. As always, speaking with FHA approved lenders may be the best option in this case. As opposed to a mortgage broker, lenders who are approved by the VA and FHA will many times offer every government mortgage program available and provide the best information about each loan.

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Steps to Refinancing Your Home

This is an excellent time to refinance. Rates are at historic lows and there are streamline programs available that make it easier than ever. FHA approve lenders can offer FHA streamline refinances. Borrowers can use the HARP program if their home value has significantly declined and a VA approved lender can help veterans take advantage of low rates as well.

Slight deductions in interest rates make a large difference in your monthly payment and the amount of interest you will pay over the life of your loan. For example a $300,000 mortgage loan at 5.5% for 30 years would have a monthly principal and interest payment of $1,703. That same loan with a 4% interest rate would have a monthly payment of $1,432. With a payment difference of approximately $270 a family could use that money to pay for a new car or save up for a much needed family vacation.

Steps to Refinance Quickly and Easily

Contact an FHA approved mortgage lender. This will give you access to the majority of available loan programs. Each lender has to go through an approval process so ask if they are approved when calling.

Pull out your loan statement. Tell the lender what you currently owe, your monthly payments, and your current interest rate. This will help them determine if today’s interest rates would save you money.

Gather your personal financial documents. This includes pay stubs, W-2’s, tax returns, and bank statements.

Locate your home owners insurance policy and provide a copy to the mortgage lender.

Complete your application over the phone, online, or in person with the information found on these documents.

The lender will send you a Good Faith Estimate (GFE) to review. This will list out your new loan amount, monthly payment, interest rate, and fees associated with closing the loan. If the terms are agreeable return the GFE along with the signed disclosure documents and the previous items you collected.

Underwriting will commence once you send in the signed paperwork and if anything else is needed they will contact you.

Respond quickly to any requests for documentation so that you do not risk losing your interest rate lock. Rates change with the market and a typical rate lock will only last for 30 days.

An appraisal will be ordered by the lender, if one is required. Present your home in the best possible light, as the appraiser will be taking pictures.

Once the appraisal is back and your documents have been reviewed the underwriter will issue a final approval, or let you know if you do not qualify at this time. After the final approval is issued loan documents will be drawn up.

Sign the loan documents at your lenders office, with a notary, or at escrow and return them promptly for processing. They do have a time limit and you do not want them to expire.

Your entire refinance can be done remotely and the process can go fairly quickly. You can help to expedite the process by having all of your personal information ready when you make the first call. During the refinance process make yourself available for calls from your lender and respond promptly. This will help you get through the process faster so that you can start saving money. Also be sure to go with a direct lender.

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How to Get the Cheapest FHA Streamline Refinance in December

Start the refinance process in November for a December closing.

Jingle Bells.. Jingle Bells… just hear the credit card swiping and present buying… Alright so that is not how the song goes but it is true – the holidays are a time of spending money. This year instead of just spending money - save money with the FHA Streamline Refinance mortgage program. A streamline refinance is fast, easy, and a quick way to save money on your monthly bills.

December is a fantastic time to refinance because closing an FHA Streamline Refinance this month will save you the most money as compared to any other month of the year. It is all about timing. Homes are taxed on a yearly basis. In order to facilitate payment the lender will typically establish an escrow account on behalf of the borrower (home owner). Every month when you make a loan payment part of that money goes toward principal, interest, taxes and insurance (PITI). When you close on a refinance the lender has to charge money at closing to bring your escrow account current for the next installment of tax payments. This can easily be thousands of dollars that are collected at closing to go into your impound account. While mortgage lenders do not benefit from this cost they are still obligated to charge it since the lender takes on the responsibility of making your tax payment.

December is the close of the current year, rolling into a new one. By closing an FHA Streamline Refinance this month the lender does not need to collect any more than one months worth of taxes because you are starting a new year fresh. By timing it correctly you can keep thousands of dollars in your pocket and out of the balance of your new loan. In order to close a refinance in December you need to apply in November. Contact your mortgage banker to get started today.

Here is what you need to apply for an FHA streamline loan program: 1. A current FHA loan. 2. An owner occupied home (not a rental property). 3. Income documents including two pay stubs and W-2’s 4. Recent bank statement. 5. Home owners insurance policy. 6. Current loan statement.

Contact an FHA approved mortgage lender to start the process. They will take your information and complete an application for you to sign. Once they run your credit report the mortgage banker will issue you a Good Faith Estimate (GFE) for review. Sign this and other loan documents, return it to the lender along with all requested personal documents – then they will start the underwriting process. It is important that you act quickly and respond promptly to any request for information in order to take advantage of Decembers savings. An FHA Streamline Refinance is a fantastic way to save money and December is the best month to close your loan.

Act today by calling your FHA approved mortgage lender and make this December more about saving money than spending it. FHA loan programs like this will not last forever.

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What are Jumbo Loan and Super Jumbo Loans?

When you owe more than $417,000 on your mortgage…

Home prices have decreased throughout the US since early 2000′s. In many parts of the country where a home used to cost $650,000 it now may only cost $500,000. A “starter” neighborhood where ramblers went for $350,000 now may be at a more affordable $225,000. While the drop in home prices has caused many home owners to feel frustrated and unsure, it has made purchasing homes easier for the middle class. Families are seeing opportunities to purchase a home for payments similar to rental prices and this has caused relief for many Americans.

Even with decreases in home prices there are still many areas throughout the country where home prices are well above the averages. Million dollar neighborhoods with beautiful tree lined streets and kitchens filled with the latest gadgets and appliances are still being built. For buyers that are willing to spend more money to purchase a home on a larger lot, in a gorgeous neighborhood, with crown molding and expansive rooms – finding a home loan can be more challenging. People without an experienced mortgage lender can be frustrated thinking that they have to save more money to come up with a huge down payment in order to get a home purchase loan. In all actuality this is often not the case.

Definition of ‘Jumbo Loan’ A mortgage with a loan amount exceeding the conforming loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO), and therefore, not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac.

A mortgage banker that is experienced in working with high net worth clients can provide home loan solutions for borrowers looking for a jumbo or super jumbo loan. The question many borrowers want to know is what is a jumbo loan and why does the loan amount matter?

For 2012 the conforming loan limit for most US counties is $417,000. That means that a mortgage loan over that amount would be considered a jumbo loan or super jumbo loan. In Alaska, Guam, Hawaii, and the US Virgin Islands the conforming loan limit is $625,500. Additionally there are places throughout the country where homes simply cost more and the limits are then higher. For example the San Francisco area is $625,500, Napa is $592,250, Baltimore is $494,500, and Boston is $465,750. If you think the area you live in is more expensive and homes cost more than the rest of the country – you may be right. A seasoned mortgage lender will know the loan limits for your particular area and be able to inform you of whether or not your loan amount would be considered a jumbo loan.

If you exceed the conforming loan limit set for your county there are still mortgage programs available to you. Mortgage loan rates are typically higher than the standard loan rates but that is because most lenders hold jumbo loans ""in house" rather than selling them to Freddie Mac or Fannie Mae. This can work in your favor, for while the rate may be higher you will likely have the same mortgage service provider as the bank that issued you the loan – which typically leads to better customer service.

The important thing to remember is that as a home buyer you should chose a home based on a combination of what you can financially afford and what you love. Do not make the mistake of assuming that you cannot purchase a home that is more expensive because lenders are not issuing jumbo loans. Jumbo loans are available. Mortgage bankers are able to provide higher earning borrowers with mortgage programs that are designed for more expensive homes. Work with an experienced professional that can guide you through the process and find the home loan that is perfectly suited for your needs.

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Refinancing at 125% LTV with the HARP 2.0 Program

In 2009 homeowners stopped paying their monthly mortgage payments. With the real estate market crashing, suddenly homeowners were in tremendous debt without any hope of paying it back. Furthermore if the homeowner were to pay their mortgage, they would be stuck with a house that was not worth nearly as much as they paid. Some chose to walk away and others pushed off foreclosure for as long as possible.

Home Affordable Refinance Program

In response to the situation the HARP program was created. The Home Affordable Refinance Program allowed homeowners who were underwater to refinance. Although at first the HARP mortgage program left many borrowers treading water, the HARP 2.0 program was released which allows refinances for homeowners with up to 125% loan to value.

This is a bailout program for homeowners who are underwater on their loans. The government is advising banks to accept loans which would usually be a deemed high risk. However they are not accepting every high LTV loan they come across, there is a specific point to the HARP 2.0 program. The home loan must be guaranteed by Freddie Mac or Fannie Mae. Also, the homeowner must be current on their mortgage payments for the last 12 months.

Currently the government is bailing out borrowers who were considered low risk before the market crash. This mortgage refinance program is built around the readjustment of home loan qualifications. Basically, the banks thought anyone with a high LTV was a risk although they may have had a good credit score and enough finances to pay their loan. However, it was almost overnight when loan to values plummeted on mortgage loans. Adding more stress to homeowners, the job market also crashed, leaving many borrowers without money to pay their loans. That is why the banks are allowing borrowers to refinance mortgages even with high LTVs.

From HARP 1.0 to HARP 2.0 the qualifications have become easier to meet. Raising the allowed LTV to 125%, the HARP 2.0 program allowed even more homeowners to refinance. HARP 3.0 is planned to be released as well, and will most likely allows even more homeowners who have been treading water to refinance their properties.

Government mortgage programs, such as the Home Affordable Refinance Program, are designed to help borrowers with specific needs. Although HARP is the youngest program it was designed for a specific reason and helps many Americans who are struggling in this bad economy. It was also designed to help banks fix their lending problems and get more cash in the door since many homeowners chose to default on their loan. Now with this second chance, someone who bought a home just before the real estate crash can fix their mortgage and honor their commitment.

As always, speaking with a mortgage banker who is HARP lender is recommended. They will offer the most up to date knowledge about the program, requirements and other available options. A direct mortgage lender will also know upcoming changes to the HARP program. This allows a borrower to receive the best home mortgage loan for their situation.