FLC's Mortgage Update
FRANKLIN LOAN CENTER’S MORTGAGE UPDATE – APRIL 30, 2010
Time lines related to Foreclosures & Short Sales for both FHA & Conventional loans.
FHA Loans
2 Years after a BK – discharge date
3 Years after a short sale or foreclosure
1 exception to the short sale rule – if the client is current on his mortgage and all other debt at time of short sale, and an extenuating circumstance can be documented, then the client could get another FHA loan sooner. Call for more details.
Conventional or Fannie & Freddie Loans
2 Years after a short sale with no mortgage or credit lates.
4 Years after a short sale with credit lates.
5 Years after a foreclosure for a primary residence
7 years after a foreclosure for a 2nd home or investment property.
Welcome back Mortgage Insurance (MI) to 2nd Homes
Primary Residences – 5% down – all property types – 680 Fico Needed – 42% DTI – Max $417,000
Primary Residences – 10% down – all property types – 740 Fico needed – 42% DTI – Max $500,000
Second Homes – 10% down – SFR’s & Detached PUD’s only – no Condo’s – Fico 720 – 42% DTI – Max $417,000
Rates are on the Rise
Fed’s Mortgage Back Security (MBS) Program ended 3/31/10 – 1.2 Trillion MBS were purchased helping to keep mortgage rates low over the past 2 years. Fed is no longer buying our MBS and will soon begin to sell off some of its massive MBS portfolio, which will only add to the already increasing supply of MBS and treasury notes being sold by our country. This will force the Fed and banking systems to increase their rates to attract investors back to these debt instruments. A lot like what we saw in the housing market but the opposite, too much supply caused home prices to drop, too much supply in debt, causes home loan rates to increase. Couple this with inflation, and we should see rates in the 6% range by the end of the year.
What does this mean, this means that you need to be talking to your buyers and sellers, and equip them with the facts so they don’t miss out on a great time to sell or buy.
FHA Changes Coming
Nothing is written in stone yet, but sometime soon we will see the down payment increased to 5% from the current 3.5%.
Max seller concession on FHA loans is currently 6%, but will be only 3% very soon.
Jumbo $$$$$$ Jumbo $$$$$$
What people don’t know is that Jumbo mortgages are available, and the rates are great. There has been a definite spike in new jumbo mortgage’s being written, so get the news out to your clients.
Property Flips, FHA & Conventional
FHA – 90 Day Flip Rule has been temporarily suspended for the year – allowing FHA loans to purchase more homes. AGENTS BEWARE – not all banks want these loans, especially if there is more than a 20% increase in sales price for the buyer from seller’s acquisition cost. Transactions with a 20% increase in price, requires 2 appraisals and a home inspection ordered by the lender.
Conventional Flips – any sales price greater than 10% in the last year – many banks won’t do these loans either. AGENTS BEWARE – make sure your lender will do these transactions. FLC Will.
CONDO FINANCING
AGENTS BEWARE – not all condo projects meet FHA, Fannie & Freddie requirements. There are many condo projects in town, which cannot be lent on. Make sure to check with your FLC lender to see if your condo project qualifies. FLC will lend in many projects that other lenders will not because of a variety of issues. It can be because of litigation, or lack of proper insurance, or too many foreclosures or HOA delinquencies, or even because the CCR’s have verbiage that is not allowed, the list goes on and on, trust us.
Franklin Loan Center is committed to keeping you in the loop, because knowledge is power. We believe that we can make a difference for you and your client, so feel free to call your Franklin Loan Center representative today, we are anxious to serve. Our mortgage banking platform, gives us the ability to process, underwrite, draw docs, and fund loans all under the same roof.
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