Greg Cowart on Zillow
Greg Cowart - Mortgage Broker or Lender at The Securus Group
Greg Cowart - Roseville Loan Guy

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For those that don’t impound: Don’t Forget To Pay Your Taxes!

I know most of my clients, and most homeowners in general, pay their property taxes and insurance with their mortgage payment. But for those that don’t it’s about that time to start thinking about cutting that check!

Property taxes for 2017-2018 are now due and payable in counties across California. The county may assess a penalty should the first installment not be paid until after the Dec 10th deadline, so make sure to get your payments in before 12.10.17 to assure they do not charge you any additional fees.

Also please remember to include your property’s APN on your check. If you don’t you may run the risk of the payment not posting, should they not be able to match the check to your property.

If you have any questions I am including links to the greater Sacramento area’s county assessor’s offices below…

 

PLACER COUNTY ASSESSOR’S OFFICE

SACRAMENTO COUNTY ASSESSOR’S OFFICE

EL DORADO COUNTY ASSESSOR’S OFFICE

YOLO COUNTY ASSESSOR’S OFFICE

No appraisal on a purchase? Yes, it’s real.

It sounds a little on the crazy side but it is true, Fannie Mae and Freddie Mac have announced that some of the purchase loans underwritten to their guidelines will no longer require appraisals. They’ve been allowing this on some loans for years (FHA and VA also does for refinances if they already back the loan), but this is the first time ever for loans used to purchase a home. 

Fannie and Freddie are the quasi-governmental organizations that create the guidelines for about half of all the mortgages done in America today. When they make an announcement like this it’s big and, while it won’t nearly apply to all the loans underwritten to their guidelines, the fact that this is happening at all is very meaningful in the market.

The appraisal waiver will be issued on a relatively small percentage of purchase transactions, mostly because of the high standards that need to be met to receive the waiver. To receive the property inspection waiver eligibility is limited to a maximum of 80% loan-to-value on one unit properties (no condos as I understand the rule), principal residences or second homes only, and there was a prior appraisal collected in the Fannie Mae database from a previous loan transaction.

These rules will severely limit who and what transactions get the waiver, but it is a start and will be very helpful in speeding up those transactions that receive the waiver.

Fannie Mae has already started this (August 19th) and Freddie Mac will begin on September 1st and we at American Pacific Mortgage are participating in the program. Let me know if you have any questions.

Greg Cowart

(916) 412-3313

New High LTV Refinance Announced, HARP extended

The FHFA (Federal Housing Finance Authority, parent of Fannie Mae and Freddie Mac) recently announced a new streamlined refinance program for homeowners without a lot of equity, as well as an extension to the HARP program.

These are related announcements as HARP is the current solution offered to certain homeowners that would like to refinance but otherwise couldn’t due to a lack of 20% equity, and the new program will replace HARP after HARP’s newly extended end date of Sept 30th, 2017. I’ve talked about HARP plenty here over the years, so you probably already know all about it, what’s more important here is the post HARP world we’re about to be living in on October 1st…

The new program will be providing a sustainable refinance opportunity for borrowers without much equity that have demonstrated responsibility by remaining current on their mortgage payments. It makes sense for both American homeowners and the FHFA, as it will help people lower their mortgage payments which ultimately reduces the risk that they will be late or default on their mortgage.

To qualify for the new program homeowners must not have missed (been over 30 days late on) any mortgage payments in the previous 6 months, must not have missed more than one payment in the previous 12 months, must have a source of income, and the refinance must result in a benefit (such as a reduction in their mortgage payment). The new refinance does not require a minimum credit score, no maximum debt to income ratio, and an appraisal will often not be required.

When the final details have been announced you’ll find them here! Until next time…

– Greg

(916) 330-4652

Could the future of credit reporting be all new, different?

Part of three big settlements the big three credit bureaus have made over credit reporting mistakes recently (the other two were with the AG of New York and the AG of Mississippi), Equifax, Experian, and TransUnion have settled a 31 state class action suit; paying a fine and, more importantly, ensuring future errors are limited…

“Big 3” Credit Bureaus Settle With 31 States Over Credit Reporting Mistakes

The big story here isn’t the fine, $5 million is a lot of money but nothing to these guys, but how credit reporting is going to be affected going forward. The original settlement is now two year’s old but today the changes are starting to take effect…

Not the least important is the fact that they will now have to hold newly reported medical collection data before putting it on a credit report. This is very important because, more often than not, these kind of collections show up on someone’s credit report before they even find out someone is trying to collect the debt. It gives time for them to handle things, or dispute the debt, before it can ever hit someone’s credit report.
Speaking of disputing debts, the other big part of the settlement is about how these agencies investigate disputes. Up until now the onus was definitely on the consumer (you and me), and even when we are right about something if the creditor responded to the dispute request saying the debt is valid the credit bureau would often side with the creditor and nothing would change about the way the debt was reported.

Going further, and I think this is big, collection agencies now have to include in their reporting who the original creditor was. This might not sound like a big thing but as someone that has literally ready many thousands (probably tens of thousands) of credit reports over the years, helping hundreds of people correct errors on them, I can’t begin to tell you how frustrating it ts to try and help someone fix a collection on a credit report where the collection agency isn’t even saying who the original creditor was!

It remains to be seen how these changes will be implemented, but it is nice to know someone is finally doing something about this. For decades now there was little to no oversight over these companies, companies who’s product might determine whether you get that job or apartment. Not to mention a mortgage!

If you have any questions or would like any help with your credit, or anything else for that matter, please don’t hesitate to reach out…

Greg!

(916) 412-3313

Credit Bureaus fined for things they can’t stop doing

Last month two of the major American credit reporting agencies, Equifax and TransUnion, were heavily fined by the CFPB.

Equifax, TransUnion fined for selling consumers credit scores not used by most lenders

The fines came from consumer complaints about practices such as selling credit scores to people that lenders don’t use, as well as using deceptive practices to fool some consumers into signing up for costly monthly subscriptions via “free” credit report offers. They’ll be paying $5.5 million in fines as well as $17.6 million in restitution to the consumers that were harmed by their actions.

If you’ve known me for any time you know I am not a fan of the credit bureaus. They are not held accountable by anyone (until now anyways) and can, through negligence and apathy, ruin people’s lives. As much as one’s credit history and score can do that anyways.

As part of the settlement they agreed to admit no wrongdoing but are paying the fines and should not be continuing these practices.

Administration rolls back FHA MI change…

I may have jumped the gun on that last post. Yes the HUD Commissioned did announce that on January 27th FHA MIP rates were going to be reduced, but I had no idea that our new president’s first act (and I mean within minutes of being inaugurated) would be to roll back this change.

It’s not a good thing for people buying homes, people looking to refinance to lower their payment, local housing markets, or local economies; but it is what it is… The change has been rescinded.

As always I will let you know if there are any changes when they come.

– Greg

This is big, FHA LOWERS MI!!!

In an unexpected announcement HUD Secretary Julián Castro has announced that FHA’s Mutual Mortgage Insurance Fund (MMIF) has more than fully recovered from the trouble it was in due to the Great Recession of 07-2011. This is going to allow them to reduce FHA MI rates by a full .25% and the new rates go into effect on January 27th, 2017.

Anyone getting an FHA forward mortgage on or after January 27th will see their mortgage insurance premium reduced by .25 of what it would be today. This is effectively reducing FHA mortgage rates by .25%, as the net effect on the mortgage payment is effectively the same!

If anyone has been thinking about buying, or considering a refinance, there has not been a better
time to utilize FHA in the last decade. Since the loans are fully guaranteed (by the funds in the MMIF) FHA rates tend to have lower interest rates than Conventional loans do. When combined with what has been a .85% MI factor on most FHA loans (30 year fixed, LTV of 95% or above) for the last couple years (it was even higher before that) Conventional would beat FHA out in quite a few scenarios. That number of scenarios is now lower and FHA is going to be even more competitive.

This is a big thing for a lot of people. It’s going to reduce monthly payments for a lot of people that otherwise would not have been able to buy, which will help support the local housing market, and it will also help reduce people’s monthly mortgage payments if they refinance, which puts money back into their pockets (and ultimately back into the local economy).

FHA loan limits increase too!

FHA UpdateFresh on the heels of Fannie Mae and Freddie Mac increasing their loan limits, the FHA has followed suit.

FHA has become one of the go to loan products for first time home buyers, those with low down payments, and those with credit challenges. It is a great product for many people in that not only does it allow one to buy (or refinance) with they otherwise might not be able to, since every FHA loan is insured against default investors love them and the interest rate is generally lower than many other options!

The maximum loan limit on an FHA loan in Placer, Sacramento, Yolo, and El Dorado Counties is now $488,750. This matches the “high balance” loan limit for Conforming loans (those backed by Fannie Mae and Freddie Mac) in these counties announced last week.

Conforming loan limits increase in first time since 2006

Good news on the loan front! For the first time in a decade Conforming loan limits have increased, offering a little bit of relief and flexibility for borrowers that otherwise would be stuck exhausting more of their resources on a larger down payment, or forced into the Jumbo market.

The new Conforming loan limit for California: $424,100…. High Balance Limit in Placer, Sacramento, Yolo, and El Dorado Counties: $488,750 FHA-questions-cost-MI

Each is an increase that will make a difference in the required down payment for people who’s loan amount would have been capped at $417,000 or $474,950, increasing the standard limit by $7,100, and the high balance limit for the 4 counties in the Sacramento area by $13,800.

Some higher cost counties, such as in the Bay Area and Southern California, see the high balance limit increasing to $636,150 (from $625,500).

There is no information yet on if this will affect FHA loam limits in any way (historically FHA has adjusted their limits with Fannie and Freddie in most, but not all, counties)

Electronic Mortgages the wave of the future?

Today, in our industry, we already do pretty much everything electronically. Pretty much…

But there is a lot of paperwork that still has to be received from the borrower, not to mention signing what seems like hundreds of pages at closing. Due to recent statements by Fannie Mae and Freddie Mac, as well as some new “eNotary” features on the horizon, that could all be changing.

fannie-mae-freddie-mac-roseville-mortgageThe first and most important part of this is the suite of new tools GSE’s Fannie Mae and Freddie Mac are soon to be rolling out to lenders. These tools include things like automated appraisals on certain loans, automatic income verification for most W2 borrowers, and automated asset verification. When applicable these new tools will allow less documentation to have to be faxed/e-mailed to the lender, as well as less time to close, and savings to both the lender and the borrower (especially when the automated appraisal applies).

With these tools Fannie and Freddie are offering some relief from “reps and warrants”, which will create more certainty on the part of the lender and MBS (Mortgage Backed Securities) investors. This should reduce costs for lenders, reduce risk for MBS investors, and (theoretically anyways) should result in shorter loan processing times, lower cost mortgages, and possibly even lower interest rates than otherwise would be able to be offered if these reforms were not implemented.

The automated appraisal will not apply to everyone, nor will the automated income verification (it will not work for self-employed people, for example), but it should result in some documentation relief for most applying for a Conventional mortgage. FHA has no comment. 🙂

The “eNotary” thing is a little further out, beta programs are just beginning, but with the new rules the Fannie and Freddie tools they’re also going to be allowing a fully digital closings, where a notary creates an electronic signature and stamp and all the borrower has to do is click a screen, rather than sign over and over and over again.

Everything will be rolling out in the near future. Of course I will be keeping everyone updated as to the news. This is a VERY big deal when it comes to both the real estate and mortgage industry as it will undoubtedly result in faster loan closings on both purchase and refinance loans, and decreased costs to buyers/homeowners.