Housing Recovery?

Maybe there is light at the end of the tunnel the housing market finds itself in. This Times article highlights the employment market improving which I've said many times; consumers don't stop buying homes because the rate goes up a quarter of a point, we stop buying houses because we don't have jobs or because we are uncertain of our employment stability. Lest we forget the continuing foreclosures (looming). I don't know that I am yet as optimistic as Time but the indicator they highlight of following the rates is smart. See rates will start to steadily rise as the economy recovers.
http://moneyland.time.com/2012/02/22/housing-recovery-at-last-evidence-mounts/

Monica's Short Sale Book

A friend of mine just published a book called "Create your own 'Done for You' Short Sale System" by Monica Adams. It's a how to guide for short sale investing. It provides downloadable forms and a complete how to guide. Really good read. You can get it on Amazon.

A new turn of events is Banks offering cash to sellers on Short Sales. Read http://www.usatoday.com/money/economy/housing/story/2012-02-19/lenders-allow-more-short-sales/53157246/1

This has been offered on foreclosures often referred to as "Cash for Keys" for quite some time the thought being that it affords the opportunity to move out of the home more easily. With cash for a short sale the thought is that they can occur faster and save the bank money in the long run. We'll have to see if this works as well for short sales as it does foreclosures.

Difference in Mortgage Loan Officers

The real difference. What is the real difference in Mortgage Lenders? In today's environment, not much....REALLY!!! Money is green, it's green today and will be green tomorrow. So, mortgage consultants sell green, regardless of where they work (insert any company name here). And the next thing, we all sell the same products: VA, FHA and Conventional...with minor if any deviations. So for those two reasons I can see why the thought would be "not much". The only true difference any more when applying for a mortgage loan and who to choose; integrity, education, dedication and willingness/ability of their processors and underwriters to get the job done. Getting the job done; closing a mortgage loan on time, without last minute conditions, at a fair rate and price and with a happy new home owner in the end. I don't understand why these simple things allude so many lenders today. Sure underwriting has gotten tighter and documentation is the key so knowing that, being prepared in advance is your best move. Being prepared means hiring the right person to use for advice in the first place. What criteria are you using when selecting someone like a Mortgage Loan Officer? You should know where your financing is coming from before you start to look for homes. Trust me, the fun part is finding the home but putting in the work upfront will ensure you; have the financing you need, that your credit is what the lender is looking for, and that you aren't wasting your time looking at homes you can't afford. So, knowing the difference in the lender you select is key to ensuring you are prepared, educated on your loan, and that this home purchase will be smooth.

Increase in Guarantee Fee

On loans sold through Mortgage Backed Securities there is a fee expressed through the cost of the rate to the consumer called a guarantee fee or Gfee. With the attached release back in December 2011, congress has mandated an increase of 10 basis points (10 cents on the dollar) to be paid directly to the Treasury. Right now these fees run between 15 and 25 basis points or cents on the dollar may be easier to understand. So the actual cash out of pocket to the borrower as expressed through higher rates charged by lenders to cover this cost could be significant:

The FHFA release from December 29, 2011:
“On Dec. 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises) by no less than 10 basis points from the average guarantee fees charged by these companies in 2011 on single-family mortgage-backed securities.

This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011 and that this increase be remitted to the U.S. Treasury, rather than retained as reserves by the Enterprises. The law also requires FHFA to determine a schedule for guarantee fee increases over a two-year period that must satisfy other requirements of the law.

To begin implementation of these requirements, today I am directing Fannie Mae and Freddie Mac to announce before year-end to their seller-servicers that, effective April 1, 2012, the guarantee fee on all single-family residential mortgages shall increase by 10 basis points.

In early 2012, FHFA will further analyze whether additional guarantee fee increases are appropriate to ensure the new requirements are being met. FHFA will announce plans for further guarantee fee increases or other fee adjustments that will then be implemented gradually over the two-year implementation window, taking into consideration risk levels and conditions in financial markets. FHFA will monitor closely the increased guarantee fees imposed as a result of the new law throughout its effective period, which ends Oct. 1, 2021.”