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Author Archives: danielduckworthmortgagenotes

$15,000 down payment assistance for eligible buyers in city of Phoenix

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HARP 2.0 HITS THE STREETS

Fannie Mae and Freddie Mac both released the new HARP 2.0 programs this week. This loan program was designed to answer the question from all the home owners who paid their mortgage on time and were underwater and have been saying; “What about me”?

For three years now all we’ve heard about has been help for distressed home owners.  But there are many, many of us out here who, through no fault of our own, have been paying our mortgage on time but cannot get our loans refinanced. Anyone who purchased a home prior to 2008 most likely has an interest rate between 5.50% and 7.00%. With current rates in the low 4.00% range it’s maddening to think that only first time home buyers or people who made large down payments before can get a low mortgage rate now. HARP 2.0 should and will help.

Anyone with a loan balance below $417,000 has a very good possibility of having their loan held by Fannie Mae or Freddie Mac.  This is the first step to take. Find out for sure (self-help is available on their web sites or call me. I can look it up for you). Generally, there is no Loan to Value consideration.  Rates today on this program are in the 4.50% – 4.75% range.

Now, there are some pitfalls. Not every loan is owned by Fannie or Freddie. You may or may not have to pay for an appraisal. There is no way of knowing until your loan application is run through the underwriting engine. Also, you will not get the current loan market rates. Expect to pay about a ½% higher rate on the HARP refinance (this part is dependent on credit score and Loan to Value).

All in all we are very hopeful this can help more home owners refinance their mortgages to lower rates and lower payments. This will help all of us.

Let us help you and your clients. Call us any time. (480) 359-5682.  If you don’t reach us right away we will get back to you within a few hours the same day or the next morning. Every time.

Do you really need to hire a credit repair company?

here’s a quick little story I wanted to share with you….

My team at Duckworth Lending Group are experts in First Time Homebuyers, 203k renovation loans as well as credit challenged borrowers.

To give you an idea of what that means, we just took over a file from a mortgage broker. The borrower had a low FICO score due to 2 medical collection accounts that were filed within the past 6 months. The broker did not know how to help them. He had the file for 2 months and the escrow was due to close within 2 weeks.

Within two hours we had completed conference calls with the hospital, the hospital billing office and the two collection agencies. We found that the insurance company paid the bills six months after the fact. On one of the accounts they only needed pay the $75 co-pay. We were able to successfully get both collection accounts deleted from their credit bureau resulting in a 42 point increase in mid-score.

This couple is now able to complete their escrow on their beautiful new $200,000 home using the VA loan program. Needless to say the realtors are ecstatic.

The lesson on this story was that the borrower did not have the knowledge or the patience to work through this problem himself. With a little help and a big dose of “calm” we were able to help him work through it. The marks are off his record and he’s ready to move forward into his new home.

Let us help you and your clients. Call us any time. (480) 359-5682.  If you don’t reach us right away we will get back to you within a few hours the same day or the next morning. Every time.

HARP 2.0 coming soon….

Just received this from our corporate office…

“We sent our East Coast Regional and a corporate secondary person to a HARP 2.0 seminar in Washington DC yesterday.  I expect to start to see some direction in the next week or two.  DU won’t be ready until mid –March so we have some time.  There are still a lot of unknowns around reps and warrants, warehouse covenants on over 100 % LTVs, and who will be doing these loans as investors.  People are starting to solicit the business but don’t have the product.  I saw a WJ Bradley solicitation for apps, but they don’t even offer the product yet – nobody can close one until after the DU release.  Keep sharing anything you see in the field. Thanks.”

I know there is a lot of technical jargon here but the point is, you may already be hearing from companies advertising this program.  It is not rolled out just yet. Beware of false promises.

Dan

Can the FHA 203(k) loan program be the cure for the Phoenix market?

Can the FHA 203(k) loan program be the cure for the Phoenix market?.

Can the FHA 203(k) loan program be the cure for the Phoenix market?

The Phoenix, Arizona market has seen some unique challenges over the past few months. Now, before you e-mail me and say “what are you talking about? The last few months?!” I know. I know. We’ve been experiencing challenges since 2007. But what I mean when I say the last few months is this.

There is now and always is a pool of first time home buyers in any market. With severely depressed prices there is no middle market here. Those who are not forced to sell are sitting tight and not moving. So there really have become only three viable buyers in this market, the first time home buyer, the relocation buyer and the investor. (One could also include the government in this discussion but we’ll leave that for another day).

The first time home buyer and the relocation buyer are competing against cash paying investors for the best properties on the market. One year ago these investors were doing “fix and flips’. That is, buying the property for a deep discount at foreclosure auction, and fixing them up and selling to first time home buyers at fair market prices. The home buyer was getting a newly remodeled house and it was good business for everyone. But then the “buy and rent” crowd moved in. The “buy and rent” investor is willing to pay a higher price for the house then the “fix and flip” investor because they don’t have to worry about reselling the house right away. Demand for rentals has risen and with it so have rental rates. The fix and flip investor is now being squeezed out of the market. There is less inventory available for fix and flip investor and the first time home buyer to buy.  What is the answer then?

Many home buyers are now going back to new builder homes. Although the new builder home prices are seemingly still a bit too high in most parts of town.. Another idea is to buy the bank REO that is in disrepair and use the 203(k) program to remodel the house.

Consider this example using simple math. Let’s say a home is priced at $80,000 but it needs $20,000 worth of work. If that home were completely fixed up and on the market today it could be sold for $100,000. The fix and flip investor does not want to buy this house. There is no immediate profit in it. The buy and rent investor is also going to be hesitant because even though rents are high they are still not wanting to buy a house at 100% of market value. Cash buyers want a discount. Enter the first time home buyer and the 203(k) program. The home buyer can buy the house, use the money to do all the renovation work and have a home that cost them exactly what is worth today.

If a Buyer’s Agent wants to dramatically increase the pool of available homes for their client to look at then consider the fixer-upper house and utilize the 203(k) loan. If a Listing Agent wants to increase the pool of buyers and command a higher price for the listing then he/she should also employ this strategy. First hire a HUD qualified 203(k) consultant to examine the home and make recommendations for repairs. Then hire a General Contractor that is HUD trained and knows how to work with the product. The end result is a remodeled house with all the appointments picked out by the home buyer and a happy customer.

For more information on how to qualify for the FHA 203(k) program and how this loan can work for you contact Duckworth Lending Group at (480) 359-5682. We are ready to guide you through this process.

Are You Ready To Buy Again After…….A Short Sale?

The Short Sale offers a tremendous challenge for all parties involved. It is an emotional strain on the home owner. It is an extraordinary amount of work for the home owner’s realtor. And it is taxing on the eventual buyer and his/her agent (and lender) as all wait and wait and wait, unsure of the outcome. Meanwhile all are left wondering if other, perhaps better, opportunities are being ignored. These are not pleasant for anyone involved.

Worse yet though has been the aftermath of this new phenomenon. A strategy the banks have now decided is the desired course of action, for them.

Perhaps HUD (the Department of Housing and Urban Development) had a hand in this from the beginning. In 2009 HUD issued one of their mortgagee letter as it pertains to new financing through the FHA loan program. HUD ML 09-52 states:

Definition of Short Sale:

  • a previously owned property was sold for less than what was owed (short sale), or
  • there is principal write down of indebtedness that cannot be refinanced into a new mortgage (short pay off).

FHA Guidance on Short Sales:

Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to;

  • take advantage of declining market conditions, and
  • purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.

However, there was acknowledgement that everyone who went through a Short Sale was not a credit risk and should be given the opportunity to buy again.

Guidance on Borrowers current at the time of Short Sale:

Borrowers are considered eligible for a new FHA-insured mortgage if;

  • they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and
  • the proceeds from the short sale serve as payment in full.

And, the final word was on those in a default and/or pre-foreclosure status at the time of the Short Sale;

  • Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances.

HUD does acknowledge that some may have been forced into Short Sale due to extenuating circumstances and offers the following;

  • default was due to circumstances beyond the borrower’s control, such as death of primary wage earner or long-term uninsured illness, and
  • a review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrower’s control that caused the default

What this all means is that if you did sell your house under a Short Sale then you may be eligible for financing right away if;

  • You made all of your payments on time during the process, including your other credit accounts and,
  • You did not sell your house just in order to take advantage of the market conditions and get out from under a big mortgage that you no longer wanted to pay.

What are generally considered acceptable reasons are forced company relocation or a loss of one income in the household due to layoff, death, extended uninsured illness or divorce.

Otherwise, if you fell behind on your payments then the three-year rules applies.

If you or someone you know sold a house as a Short Sale we can help. Now is the time to start working on your finances and credit to get yourself ready to buy a new home. Contact Duckworth Lending Group at (480) 359-5682 for professional help.

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