WASHINGTON–U.S. financial regulators are poised to finish long-delayed mortgage market standards as soon as next week, according to people familiar with the matter, adopting a relaxed set of rules designed to ensure credit is broadly available.
The regulators, in a victory for real estate and mortgage industry groups, are expected to finalize a far looser set of standards for mortgages packaged into securities and sold to investors than initially proposed in 2011.
Six regulators including the Federal Reserve, the Federal Deposit Insurance Corp. and the Securities and Exchange Commission are expected to sign off on the rule as soon as next Wednesday.
The long-expected move would wrap up a key unfinished piece of the 2010 Dodd-Frank financial law. Under Dodd-Frank, firms that issue mortgage-backed securities without government backing were required to retain a portion of the risk, under the theory that this “risk-retention” requirement would force them to pay attention to the quality of loans contained in securities.
In spring 2011, regulators proposed that issuers of mortgage-backed securities would have to hold 5% of a loan’s risk–unless borrowers brought at least a 20% down payment. The idea behind the proposal was that banks would be less likely to engage in risky lending practices if they had some skin in the game.
But after an uproar from real-estate agents, lenders and civil rights groups, banking regulators backed down and issued a new proposal last year.
By Andrew Ackerman & Alan Zibel MarketWatch
Fannie Mae recently released a report revising the waiting periods for distressed borrowers with a derogatory credit event such as a foreclosure, bankruptcy, short sale, or deed-in-lieu of foreclosure on their credit history to obtain a new loan.
For borrowers with a short sale or deed-in-lieu of foreclosure on their record, Fannie Mae’s new mandated minimum waiting period to become eligible for a new loan is four years. The time is shortened to two years if there are extenuating circumstances. According to Fannie Mae, extenuating circumstances are defined as “nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.”
If a borrower has a foreclosure on his or her credit record, the new minimum waiting period is seven years. Under extenuating circumstances, that period is shortened to three years with some additional requirements for up to seven years.
For those with a bankruptcy (chapter seven or 11), the waiting period is four years (two years with extenuating circumstances). For distressed borrowers with a chapter 13 bankruptcy, the required waiting period is now two years from the discharge date and four years from the dismissal date. If there are extenuating circumstances, the waiting time from the dismissal date is shortened to two years.
If there are multiple bankruptcy filings on a borrower’s record, the waiting period for a new loan is five years if there has been more than one filing in the previous seven years. Under extenuating circumstances, the waiting period is cut to three years from the most recent dismissal or discharge date.
Fannie Mae said in the report that it is “focused on helping lenders to provide access to mortgages for creditworthy borrowers while supporting sustainable homeownership” and that the new policy “provides opportunities for borrowers to obtain a loan to Fannie Mae’s maximum LTV (loan-to-value) sooner after the preforeclosure (short) sale or DIL.”
The new policy is effective for loans with application dates on or after August 16, 2014.
Under the previous policy, the standard waiting period for borrowers with a derogatory credit event was two years with a maximum 80 percent LTV ratio; four years with a maximum 90 percent LTV ratio; or borrowers were eligible for a new loan after a standard seven-year waiting period. For borrowers with extenuating circumstances, the previous waiting period was two years with a maximum 90 percent LTV ratio.
Posted By Brian Honea DS NewsRead More
Check out the above video for my answer to J. Paul’s question, “What’s the difference between transactional funding and hard money lending?” They are completely different forms of financing a property, and so it’s important to know the difference between the two, and which deals would require which type of funding. So, check out the video above and then feel free to leave us your comments below!
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With the national housing market showing signs of improved strength and stability, and inventory levels on the rise, sellers no longer have the advantage that they regained in 2012 after the Great Recession’s prolonged buyers-market. With buyers and sellers on a more even playing field, investors who renovate homes to resell need a competitive advantage in the market to ensure a quicker sale. In my recent post, “7 Keys to Selling Your Fix & Flip in 7 Days”, I listed seven things that I do on each and every investment that helps me consistently sell my renovation properties in less than a week. If there had been a number 8 on that list, or if I had an honorable mention, it would have been providing a home warranty.
Home warranties cover repairs on most of the major mechanical aspects of the home, including duct work, plumbing, electrical, appliances, roofing, and HVAC systems, just to name a few. Today’s buyers are looking for confidence in any purchase that they make, especially when that purchase includes the largest asset that they have ever owned. As an investor, if you include a home warranty for your renovation project, you provide the highly desirable “peace of mind” that many buyers need, especially those purchasing a home for the 1st time. When buyers know going in that they can avoid expensive service and repair bills that could disrupt their budgets, they are much more likely to choose your home over the competition.
Research studies from professionals in the housing industry have determined that when your property is covered by a home warranty protection plan it will sell faster (11 days quicker than your competition) and for more money ($2,300 more on average) than homes that don’t offer this incentive for a potential buyer. Having a home warranty in place will establish your property as a preferred home, and can be the catalyst for attracting more first-time buyers, and helping you avoid closing delays caused by equipment failure in the home. As an investor, you can also have your own peace of mind after the closing, since your buyer will most likely be contacting the home warranty coverage provider with repair issues, and not you.
In summary, to make your investments more attractive to consumers in a highly competitive market, you should use every tool available to make your property stand out above all the others in the marketplace. My “7 Keys to Selling Your Rehab in Less than 7 Days” is a MUST READ for any rehabbers (or home sellers) out there, but I neglected to include this very important “8th Key”, and that’s offering a home warranty to potential buyers. It’s an excellent strategy for making more money and getting a faster return on your investment.
Now, let me know your thoughts. Have you offered home warranties in the past, or do you plan on offering them in the future? Did you consider it a good investment? Share your comments below, and let’s learn together…Read More
Improvements in the labor market in 2014 have not translated to rapid housing market recovery this year, according to the Fannie Mae August 2014 National Housing Survey. Instead, data in the survey indicated that recovery for the housing market will be slow heading into 2015.
The number of people surveyed who said they believe now is a good time to sell a home fell six percentage points to 64 percent, an all-time low since the monthly survey began in June 2010. The number of people who said now is a good time to buy a home also declined to 38 percent.
“The August National Housing Survey results lend support to our forecast that 2015 will likely not be a breakout year for housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The deterioration in consumer attitudes about the current home buying environment reflects a shift away from record home purchase affordability without enough momentum in consumer personal financial sentiment to compensate for it.”
The number of respondents surveyed who believe home prices will increase in the next 12 months stayed at 42 percent from July to August, while the percentage of respondents who say they think home prices will go down in the next year increased to 9 percent while the share of those who thought and mortgage rates will go up in the next 12 months fell to 50 percent. The average 12-month home price expectation also took a slight dip from July to August, to 2.1 percent.
The percentage of survey respondents who said they would buy a home if they moved dropped to 64 percent while they number who said they would rent if they moved jumped up to 32 percent. The 32 percent gap between the two is the smallest in more than a year.
As far as attitudes toward the economy, the number of people surveyed who believe the economy is on the wrong track dropped down to 56 percent from July to August. The number of respondents who believe their financial situation will get better in the next 12 months went up to 44 percent, but the percentage who say their household income is significantly higher than it was at this time last year dropped from 28 to 23 percent from July to August.
“To date, this year’s labor market strength has not translated into sufficient income gains to inspire confidence among consumers to purchase a home, even in the current favorable interest rate environment,” Duncan said. “Our third quarter Mortgage Lender Sentiment Survey results, to be released later this month, are expected to show whether mortgage demand from the lender perspective is in line with consumer housing sentiment.”
Fannie Mae representatives polled 1,000 Americans live via telephone for the results in the August 2014 National Housing Survey.
Posted By Brian Honea Article printed from DSNewsRead More