On Monday August 22nd, Mortgagee Letter 2011-30 announced that the deadline for the new Uniform Appraisal Dataset (UAD) requirements has been pushed back to January 1. It will apply to FHA financed purchases (with case numbers assigned on or after Jan 1), and all HUD real estate owned (REO) and Pre-Foreclosure Sale (PFS) properties with an effective date on or after January 1, 2012.
The aim is to streamline the appraisal process and make appraisals more uniform. Appraisal management companies are working to teach and train appraisers to use the UAD, which will change the way appraisals are documented by setting standards throughout the appraisal process.
The UAD is part of a larger effort toward improving the appraisal process. In addition, a Uniform Collateral Data Portal (UCDP) will enable lenders to submit appraisal report forms electronically. Either format may be used in advance of the January 1 implementation date.
Previously, the implementation date for the UAD was set to September 1.
Monday, August 29, 2011
Thursday, July 28, 2011
Upper-mid Range California Homes Market Softening
July 28 2011 - The demand for properties in the $650K-$750K space is now shrinking. We can expect softer prices ahead in Orange County, L.A., and the Bay Area. In San Diego, the impact extends down to $555K.
Why? Changes in the maximum loan limits for FHA and high balance conventional loans take effect in the weeks ahead. Filling the void are jumbo loans with higher rates (which require higher income to qualify) and higher down payments and reserves, which require substantially more assets.
For Los Angeles, Orange County, and the Bay Area the maximum loan limit for FHA and conventional (high-balance) lending is reduced to $625,500. For San Diego, it is $546,250.
Originally scheduled for Dec 31,2010, FHA loans need to fund by Sept 1, 2011 to allow time to insure by Oct 1, 2010. Conventional high balance loans must be originated before Sept 30, 2011.
Softer prices ahead in this part of the market spell opportunity for buyers who still qualify. Historically low interest rates remain in effect.
Friday, July 22, 2011
Appraisal Industry Changes
Many changes have occurred in the appraisal industry over the last two years with even more to come. The beginning of this year started with the start of Fin-Reg (in which the Consumer Finance Protection Bureau is now “open for business” with the last week) meaning fines are coming down quickly and hard.
Starting September 1, the way appraisers report their findings and the way they deliver a report will change. UAD stands for Uniform Appraisal Dataset which is the first part in a series of changes for how the overall loan is delivered to the GSE’s. They are doing this to make the appraisals more standardized as to what an appraiser might consider good condition in Texas is vastly different than what an appraiser in Connecticut might think. There are a total of 72 additions to the form with 60 being mandatory and 12 being optional. Phrases like neutral, beneficial and adverse will become standard. Very Good, Good and Average will be replaced in condition and quality fields with a 1 through 6 rating with 1 being exceptional and 6 being horrible. Appraisals will also have to be delivered in both a pdf and xml format. The appraisal software companies have started to release the UAD reports now with the xml capabilities within a week.
Some of the important changes are
1) FHA and VA are also using the UAD reports but not the delivery method
2) Appraisals MUST be sent to the GSE’s before the loan for conventional and jumbo loans (Not FHA or VA)
3) If the lender orders a field review that review is sent with the loan and not the original appraisal
4) If an appraisal is sent to the GSE’s in the new format incorrectly it will be kicked out and deemed unacceptable
5) GSE’s wont accept a C5 or a C6 rating for condition
6) Any C6 issue makes the whole property a C6 rating unless subject to repair
Make no mistake, these are major changes in the appraisal world in both reporting and technology.
Here is a link to a webinar if you would like to familiarize yourself with the changes.
http://fanniemae.articulate-online.com/ContentRegistration.aspx?DocumentID=77856aa3-4df3-4e13-895b-4e71b79a7ed7&Cust=77787&ReturnUrl=/p/7778730514
Starting September 1, the way appraisers report their findings and the way they deliver a report will change. UAD stands for Uniform Appraisal Dataset which is the first part in a series of changes for how the overall loan is delivered to the GSE’s. They are doing this to make the appraisals more standardized as to what an appraiser might consider good condition in Texas is vastly different than what an appraiser in Connecticut might think. There are a total of 72 additions to the form with 60 being mandatory and 12 being optional. Phrases like neutral, beneficial and adverse will become standard. Very Good, Good and Average will be replaced in condition and quality fields with a 1 through 6 rating with 1 being exceptional and 6 being horrible. Appraisals will also have to be delivered in both a pdf and xml format. The appraisal software companies have started to release the UAD reports now with the xml capabilities within a week.
Some of the important changes are
1) FHA and VA are also using the UAD reports but not the delivery method
2) Appraisals MUST be sent to the GSE’s before the loan for conventional and jumbo loans (Not FHA or VA)
3) If the lender orders a field review that review is sent with the loan and not the original appraisal
4) If an appraisal is sent to the GSE’s in the new format incorrectly it will be kicked out and deemed unacceptable
5) GSE’s wont accept a C5 or a C6 rating for condition
6) Any C6 issue makes the whole property a C6 rating unless subject to repair
Make no mistake, these are major changes in the appraisal world in both reporting and technology.
Here is a link to a webinar if you would like to familiarize yourself with the changes.
http://fanniemae.articulate-online.com/ContentRegistration.aspx?DocumentID=77856aa3-4df3-4e13-895b-4e71b79a7ed7&Cust=77787&ReturnUrl=/p/7778730514
Tuesday, June 7, 2011
Fannie Mae and Freddie Mac Wind-down!
In February 2011, the Treasury department unveiled its plan to wind down GSE’s Fannie Mae and Freddie Mac. The Treasury also wants to see 10% down payments from potential borrowers.
This has sparked concern within the real estate industry and among those who recognize the importance of a healthy real estate market to the nation’s economic recovery.
Perception that these changes will take place overnight are unfounded.
Treasury Secretary Geithner has predicted a 5 to 7 year timeline for implementation.
Federal Reserve Chairman Lacker has declared that any near-term moves could be too destructive to the housing sector.
On February 9th, 2011 the House Financial Services Subcommittee held a hearing on GSE’s.
Meanwhile, on another front, Republican legislators have released 8 bills intended to accelerate the process of winding down Fannie Mae and Freddie Mac and increase oversight, promising more to follow.
These include H.R.1859, which would schedule a reduction of portfolio retained from over 700 billion currently to 250 billion in 5 years, and require a 20% down payment 1st mortgage (allowing a 10% seller-carry-back second). The bill calls for the eventual complete replacement of Fannie Mae and Freddie Mac with ”housing financing guaranty associations”. Another bill aims to end all affordable housing goals set by Fannie Mae and Freddie Mac. A hearing was held in the Financial Services Subcommittee on May 25th. The Subcommittee is likely to hold a markup of the bills sometime in June (except H.R. 1859, for which no promise to hold a future hearing or markup was made).
This has sparked concern within the real estate industry and among those who recognize the importance of a healthy real estate market to the nation’s economic recovery.
Perception that these changes will take place overnight are unfounded.
Treasury Secretary Geithner has predicted a 5 to 7 year timeline for implementation.
Federal Reserve Chairman Lacker has declared that any near-term moves could be too destructive to the housing sector.
On February 9th, 2011 the House Financial Services Subcommittee held a hearing on GSE’s.
Meanwhile, on another front, Republican legislators have released 8 bills intended to accelerate the process of winding down Fannie Mae and Freddie Mac and increase oversight, promising more to follow.
These include H.R.1859, which would schedule a reduction of portfolio retained from over 700 billion currently to 250 billion in 5 years, and require a 20% down payment 1st mortgage (allowing a 10% seller-carry-back second). The bill calls for the eventual complete replacement of Fannie Mae and Freddie Mac with ”housing financing guaranty associations”. Another bill aims to end all affordable housing goals set by Fannie Mae and Freddie Mac. A hearing was held in the Financial Services Subcommittee on May 25th. The Subcommittee is likely to hold a markup of the bills sometime in June (except H.R. 1859, for which no promise to hold a future hearing or markup was made).
Tuesday, March 8, 2011
USDA Changes Fees for Rural Development Loan
The U.S. Department of Agriculture (USDA) has issued an Administrative Notice (AN) shifting a portion of the upfront fee it charges for the Single Family Housing Guaranteed Loan Program (SFHGLP) to the annual fee.
The two fees are an attempt to make the popular loan program self-sustaining and to eliminate or at least minimize the frequent interruptions suffered by the program.
When the bill was passed an upfront fee of the full 3.5 percent rate authorized by Congress was put into effect. The AN issued on February 3, notifies lenders that USDA will be lowering the upfront fee to 2 percent of the loan amount and implementing an annual fee of 0.3 of the unpaid principal balance for all purchase loan transactions. The changes will go into effect on October 1, 2011.
The SFHGP ran through its $13.1 billion program funding early in 2010 and home buyers encountered long delays in completing their purchases until Congress reauthorized additional funding in late July. Depleted funding had been a nearly annual occurrence for the program that guarantees loans for single family homes in designated exurban and rural areas.
According to the AN, "the intent of the annual fee is to make the SHHGLP subsidy neutral, thus eliminating the need for taxpayer support of the program."
The program is popular with borrowers because of a low required down payment and with lenders because of the 90 percent government guarantee and because the loan size is limited to 115 percent of the area's median income.
The two fees are an attempt to make the popular loan program self-sustaining and to eliminate or at least minimize the frequent interruptions suffered by the program.
When the bill was passed an upfront fee of the full 3.5 percent rate authorized by Congress was put into effect. The AN issued on February 3, notifies lenders that USDA will be lowering the upfront fee to 2 percent of the loan amount and implementing an annual fee of 0.3 of the unpaid principal balance for all purchase loan transactions. The changes will go into effect on October 1, 2011.
The SFHGP ran through its $13.1 billion program funding early in 2010 and home buyers encountered long delays in completing their purchases until Congress reauthorized additional funding in late July. Depleted funding had been a nearly annual occurrence for the program that guarantees loans for single family homes in designated exurban and rural areas.
According to the AN, "the intent of the annual fee is to make the SHHGLP subsidy neutral, thus eliminating the need for taxpayer support of the program."
The program is popular with borrowers because of a low required down payment and with lenders because of the 90 percent government guarantee and because the loan size is limited to 115 percent of the area's median income.
Monday, February 28, 2011
FHA Flipping Waiver extended to 12/31/2011
FHA Flipping Rule Limitations
Waiver has been extended to 12/31/2011.
The waiver to the FHA flipping rule is limited to those sales meeting the following general conditions:
* All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
* In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the sale meets specific lender conditions. (Typically, these will include a copy of the HUD-1 from the previous closing. If more than 20% markup, copies of receipts and contracts for rehabilitation.)
Conventional loans flipping rules will vary from investor to investor, 90 days from purchase is generally required.
Waiver has been extended to 12/31/2011.
The waiver to the FHA flipping rule is limited to those sales meeting the following general conditions:
* All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
* In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the sale meets specific lender conditions. (Typically, these will include a copy of the HUD-1 from the previous closing. If more than 20% markup, copies of receipts and contracts for rehabilitation.)
Conventional loans flipping rules will vary from investor to investor, 90 days from purchase is generally required.
Federal programs aimed at keeping people in their homes
Despite efforts to the contrary, there still is a major gap between homeowners in danger of losing their homes and the resources available to help them avoid foreclosure.
A study in Nevada found that more than half facing foreclosure didn't know about federal and state programs aimed at helping them. Furthermore, almost as many said their lenders were "not willing at all" to work with them.So if troubled Nevada owners aren't getting the message that help is available, it's a safe bet to assume that neither are owners in other states.
With that in mind, here is a quick rundown of the federal programs aimed at keeping people in their homes.
Under the broad Making Home Affordable initiative, Uncle Sam offers several options to owners — but not to investors — including the Home Affordable Refinancing Program (HARP) and the Home Affordable Modification Program (HAMP).
If you are on time with your payments but cannot take advantage of today's lower interest rates because you owe more than your home is currently worth, HARP can help if either Fannie Mae or Freddie Mac holds your loan; the two mortgage giants touch perhaps half of all loans.
If you are struggling to make your payments because your income has been curtailed or your interest rate has increased, you may be eligible to have the terms of your loan changed under HAMP. The amount you owe must be less than $729,250, your loan must have been taken out before Jan. 1, 2009, and your total monthly housing outlay — principal, interest, taxes, insurance and homeowner-association dues — must be more than 31% of your current gross earnings.
For owners who are having a tough time making their house payments because they have a second mortgage, the Second Lien Modification Program (2MP) offers a way to lower the payments on the junior loan when the primary mortgage is modified under HAMP.
Under 2MP, which is meant to be complementary to HAMP and is somewhat more complicated than the other alternatives, the owner of the second lien and the company administering the loan on the lien owner's behalf are given monetary incentives to reduce your rate, extend the term or possibly even extinguish the loan altogether.
If you can no longer afford your home but want to exit gracefully and avoid the negative effects of foreclosure, the Home Affordable Foreclosure Alternatives (HAFA) program offers up to a $3,000 cash stipend to help you transition into more affordable housing. To qualify, you cannot be eligible for a trial loan modification, fail to complete a successful trial mod or miss two consecutive payments during the trial-mod period.
HAFA is designed to streamline two popular options to foreclosure, a short sale and a deed-in-lieu. With a short sale, the loan servicer allows you to sell the property for less than what is owed. With a deed in lieu of foreclosure, you voluntarily transfer ownership to the servicer with the understanding that foreclosure proceedings will be dropped.
If you are considering a short sale, work only with a real estate agent who has short-sale experience. These deals are so tricky and time-consuming that only a professional who has done several of them will do. If your agent claims to know what he or she is doing, ask for references from several satisfied customers just to make sure.
Mortgage servicers who participate in the Making Home Affordable program are required to evaluate your eligibility for a loan modification before looking at your other options. If you request a mod and are determined to be mod-worthy, you will enter a trial period.
Modification possibilities include lowering your interest rate, extending the term of your loan, allowing you to skip several payments or even reducing the balance owed.
If you don't qualify for any of the above options, your servicer will evaluate your situation for possible inclusion in proprietary programs. HOPE Now, a private, voluntary alliance of servicers, investors, insurers and nonprofit counselors, says its members completed twice as many loan modifications under their own programs as under the government's.
If any of these possibilities seem as if they even remotely apply to your situation, nose around the government's Making Home Affordable website at http://www.makinghomeaffordable.gov.
It's also a good idea to consult with a local housing counseling agency that can help you wind your way through the maze you are about to enter. Such an agency usually charges a minimal fee — or nothing at all — so stay away from anyone who wants money from you in advance, pressures you to sign the house over to him or her or tells you to make a payment to anyone other than your lender.
Counselors also will have their fingers on state and local initiatives to help citizens stave off foreclosure.
For a list of government-approved agencies, visit the Department of Housing and Urban Development's website at http://www.hud.gov or call (800) 569-4287 to be connected to HUD's interactive voice system. A few other good resources are the National Foundation for Credit Counseling at http://www.nfcc.org; NeighborWorks America, http://www.nw.org, a leader in affordable housing and community development; and the Consumer Credit Counseling Service of Greater Atlanta, http://www.credability.org, a nonprofit with a local name but a national footprint.
- Lew Sichelman, LA Times
A study in Nevada found that more than half facing foreclosure didn't know about federal and state programs aimed at helping them. Furthermore, almost as many said their lenders were "not willing at all" to work with them.So if troubled Nevada owners aren't getting the message that help is available, it's a safe bet to assume that neither are owners in other states.
With that in mind, here is a quick rundown of the federal programs aimed at keeping people in their homes.
Under the broad Making Home Affordable initiative, Uncle Sam offers several options to owners — but not to investors — including the Home Affordable Refinancing Program (HARP) and the Home Affordable Modification Program (HAMP).
If you are on time with your payments but cannot take advantage of today's lower interest rates because you owe more than your home is currently worth, HARP can help if either Fannie Mae or Freddie Mac holds your loan; the two mortgage giants touch perhaps half of all loans.
If you are struggling to make your payments because your income has been curtailed or your interest rate has increased, you may be eligible to have the terms of your loan changed under HAMP. The amount you owe must be less than $729,250, your loan must have been taken out before Jan. 1, 2009, and your total monthly housing outlay — principal, interest, taxes, insurance and homeowner-association dues — must be more than 31% of your current gross earnings.
For owners who are having a tough time making their house payments because they have a second mortgage, the Second Lien Modification Program (2MP) offers a way to lower the payments on the junior loan when the primary mortgage is modified under HAMP.
Under 2MP, which is meant to be complementary to HAMP and is somewhat more complicated than the other alternatives, the owner of the second lien and the company administering the loan on the lien owner's behalf are given monetary incentives to reduce your rate, extend the term or possibly even extinguish the loan altogether.
If you can no longer afford your home but want to exit gracefully and avoid the negative effects of foreclosure, the Home Affordable Foreclosure Alternatives (HAFA) program offers up to a $3,000 cash stipend to help you transition into more affordable housing. To qualify, you cannot be eligible for a trial loan modification, fail to complete a successful trial mod or miss two consecutive payments during the trial-mod period.
HAFA is designed to streamline two popular options to foreclosure, a short sale and a deed-in-lieu. With a short sale, the loan servicer allows you to sell the property for less than what is owed. With a deed in lieu of foreclosure, you voluntarily transfer ownership to the servicer with the understanding that foreclosure proceedings will be dropped.
If you are considering a short sale, work only with a real estate agent who has short-sale experience. These deals are so tricky and time-consuming that only a professional who has done several of them will do. If your agent claims to know what he or she is doing, ask for references from several satisfied customers just to make sure.
Mortgage servicers who participate in the Making Home Affordable program are required to evaluate your eligibility for a loan modification before looking at your other options. If you request a mod and are determined to be mod-worthy, you will enter a trial period.
Modification possibilities include lowering your interest rate, extending the term of your loan, allowing you to skip several payments or even reducing the balance owed.
If you don't qualify for any of the above options, your servicer will evaluate your situation for possible inclusion in proprietary programs. HOPE Now, a private, voluntary alliance of servicers, investors, insurers and nonprofit counselors, says its members completed twice as many loan modifications under their own programs as under the government's.
If any of these possibilities seem as if they even remotely apply to your situation, nose around the government's Making Home Affordable website at http://www.makinghomeaffordable.gov.
It's also a good idea to consult with a local housing counseling agency that can help you wind your way through the maze you are about to enter. Such an agency usually charges a minimal fee — or nothing at all — so stay away from anyone who wants money from you in advance, pressures you to sign the house over to him or her or tells you to make a payment to anyone other than your lender.
Counselors also will have their fingers on state and local initiatives to help citizens stave off foreclosure.
For a list of government-approved agencies, visit the Department of Housing and Urban Development's website at http://www.hud.gov or call (800) 569-4287 to be connected to HUD's interactive voice system. A few other good resources are the National Foundation for Credit Counseling at http://www.nfcc.org; NeighborWorks America, http://www.nw.org, a leader in affordable housing and community development; and the Consumer Credit Counseling Service of Greater Atlanta, http://www.credability.org, a nonprofit with a local name but a national footprint.
- Lew Sichelman, LA Times
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