by wildcherry on Friday, November 6th, 2009 | Business, News | No Comments

Fannie Mae rental program will allow one-time homeowners that have allowed their house to go into foreclosure to actually rent the very same house back at “market value” in something called a “Deed for Lease” program. Taxpayer cost is not yet clear.

To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the market rent, which will be established by the management company running the program. Rents are based on current market rates.

The plan is expected to be particularly attractive in places like Phoenix or Orange County, Calif., where homeowners are stuck paying large mortgage bills on properties that are now worth far less than they originally paid. At the same time, rents have been falling in those areas. So by renting the same house, former homeowners could wind up paying far less every month.

Fannie Mae execs believe it is a good solution to the thousands of bad loans littering neighborhoods and causing blight as homes sit vacant and begin to deteriorate.

The Wall Street Journal reports: “The “Deed for Lease” Program lets borrowers who don’t qualify for loan modifications transfer their property to Fannie Mae in exchange for a lease. Borrowers-turned-tenants will pay market rents, which in most cases are lower than the cost of mortgage payments, and might be offered extensions when their leases expire.”

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The program helps “eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities,” Jay Ryan, a Fannie Mae vice president, said in a statement.

AOL News notes, “Fannie Mae’s sibling company, Freddie Mac , launched a similar effort in March. That policy, however, requires the foreclosure to be completed and only allows month-to-month leases.”

The new plan for dealing with the aftermath of the real estate crisis, called the “Deed for Lease” plan (since “this for that” themed plans apparently work really well for fixing the economy) So if you can’t qualify for a home loan under the new regulations, but want to try and keep your home, you will now get a one year rental period from Fannie Mae, that gives additional time and opportunity to work towards keeping your home that you’ve invested so much in.

Freddie Mac has had a similar deal in place for some time as well, with somewhat different regulations on how the home can be rented after it is fully foreclosed. Hopefully more such compromises can be found, so that the many hard working families caught up in this crisis will not have their lives turned upside down.

Tags: "Deed for Lease", Fannie mae, Fannie Mae rental program, Fannie Rent, foreclosed home, Foreclosure, Freddie Mac, Home Prices, Housing Crisis, Mortgage Crisis, Real Estate, rent foreclosed home

by wildcherry on Wednesday, October 28th, 2009 | Life, Tips | No Comments

To qualify for FHA loans you must be a first time home buyer; however the FHASecure program is available for homeowners with adjustable-rate mortgages who are at risk of foreclosure. All borrowers, whether they’re receiving a new loan or refinancing an old one, must meet the following basic FHA loan criteria:

* Have a valid Social Security Number (SSN)

* Be a legal resident of the United States

* Be of legal age to sign a mortgage in your state.

Some of the credit guidelines from the FHA are listed below.

• Most FHA lenders want to see FICO scores of 620 or higher to qualify you. Check your score with FICO® Quarterly Monitoring
• Even if you do not have a credit score, you can still qualify if you have other credit such as phone, utility or cable bills and can produce credit history with cancelled checks or printouts
• In Chapter 7 bankruptcy, you can still qualify for a FHA mortgage 2 years after your discharge, and in Chapter 13 bankruptcy you can qualify if you are making payments on time and with the trustee’s permission
• You can qualify to get a FHA loan 3 years after a foreclosure.

FHA Underwriting Standards

As with all lenders, you must meet additional requirements regarding your credit history, income, and debt-to-income ratio. The FHA will also consider your down payment plus additional cash for closing.

Credit History

Unlike most other lenders, the FHA doesn’t require you to have a traditional credit history in order to consider your reliability. Instead, lenders can build a credit history based on utility payments, rental payments, auto insurance payments, and other payments that don’t appear in credit files. They will also consider whether you’ve had a bankruptcy in the last two years. You should have a good history of on-time payments in the last two years and be current on all payments. If you’re in default on any student loans, you will not qualify for an FHA loan.

Income and Ability to Pay

Regardless of the FHA loan limit for your area, the loan amount you qualify for depends on your income and ability to pay. Under FHA standards, you should spend no more than 31% of your monthly income on your mortgage, property tax, and insurance. In addition, you should spend no more than 43% of your income on total debt payments, including student loans, car loans, and credit card debt.

Down Payment and Cash on Hand

FHA loans require a minimum of 3% cash-on-hand for the down payment and closing costs. The following maximum loan-to-value ratios also apply to either the appraised value or sales price (whichever is lower):

Collateral

FHA underwriting standards determine the total loan you can receive. The home you use as collateral must be worth at least 3% more than the loan. A 20% down payment won’t increase the available loan funds, but it will enable you to buy a more expensive home. It might also make it easier to qualify for a conventional mortgage that doesn’t require FHA’s mortgage insurance premium.

FHA loan standards are much more generous than conventional loan standards, but you must still be able to meet their basic requirements and underwriting standards in order to qualify. Use the FHA’s loan estimate tool to determine how much home you can afford.

Tags: avoid foreclosure, Borrowers, Buyers, Federal Housing Administration, Fha, FHA Loan, Fha Loans, Fha Mortgage Company, FHA Refinance, First Time Homeowner, Foreclosure, Home Loan, Homeowners, how to qualify for FHA loan, Mortgage, Mortgages, Sellers

by wildcherry on Monday, October 12th, 2009 | Business, News | No Comments

About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com.

The report shows that foreclosures, after declining earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all foreclosures. “The slope of that curve in recent months is much sharper than it was recently,” said Stan Humphries, chief economist for Zillow. Rising foreclosures among more-expensive homes could create added pressure for a housing market that has shown signs of stabilizing in recent months as sales of lower-priced homes pick up.

The Zillow research compared homes against the median values for their local market and broke each market into three tiers by value. Zillow then looked at the share of monthly foreclosures in each tier over the past decade.

Foreclosures are rising in more expensive markets as home values in those areas fall, leaving more homeowners with mortgages that exceed the value of their properties. Prime loans accounted for 58% of foreclosure starts in the second quarter, up from 44% last year, according to the Mortgage Bankers Association. Subprime mortgages accounted for one-third of foreclosure starts, down from one-half last year.

The prime category includes so-called exotic mortgages that were increasingly used to buy more expensive homes, including interest-only mortgages that allowed borrowers to defer principal payments during an initial period. Borrowers often aren’t able to refinance out of these products because the drop in home values has left them with little equity in their homes.

Default rates are particularly high and expected to rise on option adjustable-rate mortgages, which allow borrowers to make minimum payments that may not cover the interest due. Monthly payments can increase to sharply higher levels after five years or when the outstanding balance reaches a certain level. A study by Fitch Ratings found that 46% of option ARMs were 30 days past due last month, even though just 12% of such loans have reset to higher monthly payments.

Source:WSJ

Tags: Defaults, economy, Foreclosure, Foreclosure Rates, Home Values, Housing Crisis, Housing Data, Housing Report, Housing Statistics, Mortgage, Mortgate Defaults, Prime, Real Estate, Recession, Subprime Mortgages, Zillow