Mortgage Loans

Mortgage Loans

Mortgage Forgiveness Act Signed into Law

John Thomas December 21, 2007

Yesterday, President Bush signed H.R. 3648, The Mortgage Forgiveness Act of 2007, into law, sparing homeowners the tax burden associated with canceled mortgage debt. Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was considered taxable income. The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007 to the end of 2009. The bill also extends the tax deduction for mortgage insurance premiums through 2014. Keep Reading...

Federal Reserve Board Weighs in on Mortgage Reform

John Thomas December 19, 2007

Today the Federal Reserve Board, under the authority of the Truth in Lending Act, unanimously voted to propose important changes to the mortgage industry. According to Business Week, the following proposed changes would affect subprime loans or those loans the Fed defines as “higher-priced mortgage loans” (loans with rates at least 3 percentage points above a comparable Treasury security for first mortgages and 5 percentage points for second loans, or home-equity loans):

  • Creditors would be prohibited from engaging in a pattern or practice of extending credit without considering borrowers’ ability to repay the loan.
  • Creditors would be required to verify the income and assets they rely upon in making a loan.
  • Prepayment penalties would only be permitted if certain conditions are met, including the condition that no penalty will apply for at least sixty days before any possible payment increase.
  • Creditors would have to establish escrow accounts for taxes and insurance.

The Fed also proposed another set of rules for all mortgages, including what the Los Angeles Times called “stricter disclosures on ‘yield spread premiums.'” These rules include: Keep Reading...

FHA Reform Bill passes Senate

John Thomas December 15, 2007

Important Legislative Update!
 

The Senate today passed their version of FHA reform – S 2338.  Although it has many similarities, this bill is different than the FHA legislation passed by the House (HR 1852 and HR 1427).  The key points of the legislation include:

  • Raising loan limits on all FHA loans including reverse mortgages
  • Lowering down payment requirements on FHA loans
  • Removing the cap on allowable reverse mortgage originations

 

Click Here for a summary of the Senate bill

 

 
Also, you can go directly to the Library of Congress THOMAS web site and search for S 2338, HR 1852, and/or HR 1427 to read the full text of all three bills.
 

The next step for all these bills is for House and Senate negotiators to try and come to an agreement on how the final version of FHA reform will look.  Once the House and Senate come to an agreement, the final version of the bill will be sent to the President for his approval.  Being that we are coming up against the end of the year holiday break, it is unlikely that FHA reform will pass this year, but if the parties are motivated enough to do the right thing, who knows what can happen!

Delaware Mortgage Rate Update – November 30, 2007

John Thomas November 30, 2007

In a speech, last night Fed Chairman Bernanke said resurgent financial strains have dimmed the outlook for growth in the U.S economy.  Bernanke’s comments are considered by many to signal a 100% probability that the Fed will cut short-term interest rates by at least 25 basis-points at the upcoming Open Market Committee meeting on December 11th.

I think it is important to note that the bond and mortgage-backed security markets have already priced-in a December rate cut of 25 basis-points and are well along the road to pricing in a 50 basis-point rate cut.

If you’re looking for additional rate and price improvement following the official monetary policy decision announcement on December 11th I’m afraid you may be disappointed. The risk is that you’ll be sharply disappointed if the Fed chooses to cut short-term rates by 25 basis points.

It is almost always surprising data or events that catch a large number of traders leaning in the wrong direction that causes big price and rate swings in the mortgage market. Experienced market participants (those that have been burned more than once) tend to live by the old market saw that says, Buy the rumor ¦ sell the fact.

Looking ahead to next week traders will be nervously fidgeting with their positions ahead of Friday’s November nonfarm payroll report (scheduled for release at 8:30 a.m. ET).

The general consensus among market participants I’ve talked to is that a headline payroll number less than 80,000 together with a national jobless rate that bumps up to 4.8% ( currently 4.7%) will make a 50 basis-point rate cut from the Fed the following Tuesday much more likely.  If the headline payroll number exceeds 110,000 and the jobless rate doesn’t budge from 4.7% — most believe the Fed will choose to be more cautious cutting short-term rates by only 25 basis points.

In case you weren’t aware of details of a government-sponsored plan to temporarily freeze interest rates on certain troubled subprime loans may be announced as early next week.

In general, the government and a coalition of mortgage-related companies and private alliances have largely agreed to extend the lower introductory rate on home loans for certain borrowers.

Exactly which borrowers will qualify for the freeze and how long the freeze will last are yet to be determined. I’ll keep you posted as this developing story gains more detail.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Mortgage Market Update – November 29, 2007

John Thomas November 29, 2007

New orders for the long-lasting U.S. made manufactured goods dropped for a third straight month in October. Orders fell 0.4% last month after declining by 1.4% in September and 5.3% in August. Non-defense capital goods, long considered a proxy for business investment, weakened by 2.3% in October the biggest monthly decline in this index since February of last year.

Stock jocks viewed the data has an indication that the trend in manufacturing weakness may be in the early bottoming stage while bond daddies looked at the same data and see it indicating that the Fed will undoubtedly have to sharpen up their short-term rate cutting scissors. It is highly unlikely both camps will be right on their market call – so the overall picture remains muddled.

In other news of the day, the National Association of Realtors reported that October existing home sales fell 1.2%. The decline in the headline number was sharper than most economists anticipated but after a moment of indecision, most traders shrugged the number off when a closer examination of the report detail showed big drops in multi-family and condo sales while single-family unit sales remained flat.

The Mortgage Bankers of America released their weekly report on mortgage applications this morning. The report showed that mortgage applications declined 4.3% in the week ended November 23rd.  Seasonal factors likely played a large part in the decline since 30-year note rates slipped 9 basis points lower to a national average of 6.09% last week. Jumbo and adjustable note rates both moved fractionally higher during the period.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Doug MacGray’s Weekly Financial Update – Week of November 25th

John Thomas November 25, 2007

Various economists and investment houses are now coming out with their “odds” as to whether we will move into a recession. Here is my wisdom: I don’t know. Of course, you should be prepared in case we do or if we don’t. Depending on your situation, you want to be appropriately defensive, but not so “safe” that you do not participate in market growth when it occurs. Make sure you know how you are invested, have a strategy and sleep well.  If you are not sleeping well, you either don’t have a strategy, or you do but it is too aggressive. (Past performance is never a guarantee of future results.)

A GOOD START:  I hate getting caught up in this, but holiday consumer spending is an obsession, so here I go:  According to ShopperTrak RCT Corp., which tracks sales at more than 50,000 retail outlets, total sales rose 8.3 percent to about $10.3 billion on Friday, the day after Thanksgiving, compared with $9.5 billion on the same day a year ago. ShopperTrak had expected an increase of no more than 4 percent to 5 percent.

A SHORT TERM PLUS FOR THE FALLING DOLLAR: The falling dollar is rife with danger for this economy.  For the moment, U.S. shopping outlets are benefiting from foreign visitors making trips to the U.S. for the specific purpose of doing their holiday shopping.  For example, in my former hometown of Wrentham, Massachusetts:  a record 1,000 international tourists have scheduled organized shopping trips as of yesterday to Wrentham Village Premium Outlets – more than double the number last year. Hundreds more were expected to come on their own, according to Beth Winbourne, the outlet’s general manager. Boston is projecting a 14 percent increase in overseas visitors this month compared with November of last year.

A BAD HOUSING OCTOBER:  In October, new residential construction was higher than expected. But, all of the gains were in multi-family units, not single-family dwellings, which were down another -7.3%. New construction permits were down -5.9%.

FUEL COSTS AS A PERCENTAGE OF TOTAL EXPENSE LEVELS: People in Alabama, Mississippi, and Kentucky spent more than 11% of their income to fuel their car, while residents of New York and New Jersey average less than 2%.

STATE TAX RATES: As a percentage of income, the state with the lowest tax burden is Alaska at 6.6%. Rounding out the top five were New Hampshire, Tennessee, Delaware, and Alabama. The state with the highest tax burden at 14.1% is Vermont. Rounding out the top five are Maine, New York, Rhode Island, and Ohio (between 14% and 12.1%). New Jersey is 10th at 11.6%. Connecticut is 8th at 12.2%. Maryland and Pennsylvania are virtually tied for 23rd at 10.8%.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

What are the Advantages of an FHA Loan?

John Thomas November 24, 2007

FHA loans are not credit-score driven. Although many wholesale lenders have minimum credit scores, many do not. They traditionally underwrite the file, according to FHA guidelines. If you have no credit or no good tradelines, then FHA loans also allow you to use alternative credit. Monthly obligations like gas, electric, and cell phone bills wherever money is going on a monthly basis as long as you can document it, it’s possible to essentially build a credit history for loan applicants.

Another feature of FHA loans is that all funds can come from a gift, either from a family member, through the seller, or from a down-payment assistance program. Moreover, it’s permissible to have a six percent seller contribution on top of the gift funds which can go towards paying all of the closing costs. FHA Loans also offer market interest rates with no mark up for the high LTV that comes with other high LTV programs. FHA loans can be used for purchasing a home or refinancing a home. If you can even use an FHA loan for a cash-out refinance, but the maximum LTV is 95%.

If you need an FHA loan or have questions please feel free to contact me. I can help you with an FHA loan in all 50 states. If you would like a free FHA Loan information packet, please feel free to call me at 302-368-7132.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Congress is trying to make it harder for you to get a home loan

John Thomas November 20, 2007

Congress is currently debating your ability to obtain mortgage financing in the future.

H.R. 3915 – a newly introduced piece of legislation that is going to be debated on the House floor in the coming days.

Commonly referred to as the “Mortgage Reform and Anti-Predatory Lending Act of 2007,” this Bill is attempting to make sweeping changes to the way the mortgage market operates.

Here’s what it would mean for borrowers if the Bill were to pass as currently drafted:

  • Refinancing transactions would become more difficult and potentially expensive;
  • Closing costs and points paid to lower an interest rate could become “out of pocket” expenses in some cases and not allowed to be included in refinance transactions;
  • Discriminate against borrowers who have had poor credit histories from getting loans that they might otherwise deserve to get;
  • Complicate the loan process for many borrowers as it would eliminate reduced documentation options such as “Stated Income” or “Low Documentation” loans. 

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