Home Affordable Refi aka HARP 2.0 Phase 1

Fannie Mae and Freddie Mac' s Home Affordable Refi enhancements will be released in phases with the first version of HARP 2.0 becoming available tomorrow, December 1, 2011.  The next phases will allow for expanded loan to value requirements and pricing enhancements. Fannie Mae will have an update to their selling guide in mid-December (so more information to follow).  Freddie Mac and Fannie Mae plan on having their underwriting system (DU and LP) updated on or before mid-March 2012. I will continue to keep you posted as we learn more information.

Here's my recommendation for Washington area home owners who may be eligible for a Home Affordable Refinance:

  • You can apply for HARP 2.0 tomorrow, December 1, 2011.  
  • We should be able to determine whether your loan qualifies based on the current "phase" available.  We are able to re-run your scenario during the next phase of HARP, if needed.
  • Loan to values under 80% may not qualify for the new Home Affordable program but you may still be able to take advantage of today's lower rates. 
  • Some of my refinance clients have already had their appraisals waived with their Fannie-to-Fannie DU Plus refinances. 
  • Unless you have an owner occupied or second home and are opting for an amortized mortgage of 20 years or less, the pricing difference with HARP 2.0 may not be that significant.
  • I'm happy to provide you with a Home Affordable Refi rate quote.

Here are some pointers on what you can do to prepare for your Home Affordable Refinance

I'm still waiting to hear from all of the private mortgage insurance companies to see if and how they will participate in this program.  We are also waiting to see how the lenders and banks we work with are going to treat this and if they've added layers of overlays to this program.  

UPDATE 12/15/11: If you qualify for a HARP refinance and have borrower paid private mortgage insurance, as long as the insurance can be transferred, we can help you. Lenders (secondary markets) and private mortgage insurance companies are working on allowing this for lpmi (lender paid mortgage insurance). More info on LPMI to follow. 

I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington…and yes, I would love to help you with your HARP (or any) refinance:

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP. You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites: www.freddiemac.com/mymortgage or http://www.fanniemae.com/loanlookup/

If you have any questions about this or any mortgage program and your property is located in Washington state, I'm happy to help you.  I am only licensed to originate mortgages in Washington state.

Bottom line: we are still receiving (and waiting to receive) more information about the HARP 2.0 enhancements and bank/lender overlays.  However you can start your application on December 1, 2011 and "float" your rate, if needed.

How to Shop for Title Insurance or Escrow in Washington

I’m often asked by my clients if they can select their title or escrow provider and the answer is a big YES!  Some feel that title and escrow fees are all within a close range and this simply isn’t the case. I have seen fees for these services vary by hundreds of dollars.

Here are some pointers you may find helpful if you are interested in shopping for your title or escrow provider:

Know how your rates are priced.  With escrow on a purchase transaction, you will need to provide the sales price and let the escrow company know if there’s going to be a second mortgage or if a courtesy signing may be required or if it’s a short sale. It’s important to ask the escrow company for ALL of their fees. I’ve received quotes from an independent escrow company in Ballard where they try to pad their quotes with a $200 “miscellaneous fee” just in case something “pops up” during the transaction.  Ask the escrow company if the fee is the “full” fee or your “half”. Typically, in Washington the buyer and seller split the escrow fee. 

NOTE: If your escrow provider is a title company, most offer a significant discount on their title fees when title and escrow are at the same company with a purchase. This discount often applies to both buyer and seller.  Using two different title companies for title and escrow services seems like money flying out the window to me.

If your transaction is a refinance, typically the escrow company just needs the loan amount. As with a purchase, ask for “all” their fees. Do they charge a reconveyance processing fee, wire fee or courier fees (also possible with purchase transactions). 

Have the escrow company provide your quotes in writing – they should be able to easily email this to you.

With title insurance, the company will need to know your sales price and loan amount. For a refinance, they just need your proposed loan amount. They will also need to know which county the property is located.  In Washington, the seller typically pays for the owners policy and the buyer pays for the lenders policy.  With a refinance, the buyer pays for the lenders policy.  

Ask for possible discounts. Some title companies will provide an additional discount if you title is placed electronically via their website.

Start early. You’ll want to obtain your quotes before your purchase and sales agreement is drafted.  If you’re involved with a purchase transaction, real estate agents will try to direct where the title and escrow services are placed. Sometimes this is a legitimate concern where the agent has received excellent service from their escrow and title team and/or it could be that one of the real estate brokerages have an ownership interest in the title or escrow company (see below). Regardless, the consumer does have the right to select these service providers.  Some title or escrow companies may insist on needing a signed purchase and sales agreement before providing a quote which is not needed if you provide the above information (sales price, loan amount and county the property is located in).

If your transaction is a refinance, let your mortgage originator know that you would like to shop for these services at your loan application.

NOTE: Mortgage companies may have ownership interest in an escrow company as well. You are not required to use them – it is your choice!

Ask for recommendations. Talk to your real estate agent and mortgage originators about who they like to work with and why. Does their company have an ownership interest in these providers? Will the escrow company do amazing back flips to make sure your transaction closes smoothly and on time?  Ask your family or friends who have recently closed a transaction, who they used for title or escrow providers.

Know the relationships. A few of the big real estate brokerages have interest in title and escrow companies. In the greater Seattle area, we have the following large real estate brokerages who continue to maintain an interest in title or escrow companies:

  • Coldwell Banker Bain: Rainier Title; and Escrow Professionals of Washington (EPOW
  • Windermere: CW Title (formerly known as Commonwealth of the Pacific)

According to Northwest Title Company’s website, one or more principals at Routh, Crabtree, Olsen, PS, a firm located in Bellevue which does significant REO (foreclosure) escrow business, have interest in Northwest Title Company.

Higher fees does not always equate to better service.  I’ve seen some escrow companies that charge significantly more than what I would consider to be a fair market price. They may try to justify this because they have attorneys on staff or because the property is a short sale or foreclosure – ask why.  I have no problem with anyone being compensated for work performed as long as it is a fair market price.

Some companies make it easier for you to shop than others with rate sheets or calculators posted on their websites. I still recommend giving the title or escrow company a friendly phone call followed up with an email to obtain your personal quote in writing. I’m amazed at the lack of service I sometimes find when I call a title or escrow company to obtain a quote for my Good Faith Estimates.

I used to have my preferred title and escrow providers listed on this blog, however DFI felt that this was a potential violation of respa since they viewed it as free advertising even though I had a link to all title and escrow companies and encouraged consumers to shop. 

Bottom line: consumers are paying for these services and are free to exercise their right to shop for and select their title and escrow providers. 

Mortgage Porter celebrates Five Years!

Hard to believe that five years ago today, I became a "mortgage blogger". I really didn't expect anything to happen when I wrote my first post…I simply had to vent because I wanted to set our local media straight about the licensing of mortgage originators.  Five years ago, to require a mortgage originator to be licensed, to take state regulated clock hour courses, to have to pass an exam and to have a background check was new and was only required of mortgage originators who did not work for a depository bank or credit union. So what launched my blog? 

I was watching the late night news and King 5's Suzannah Frame was covering a local cause of mortgage fraud and she ended her segment saying something along the lines of "Thank goodness all mortgage originators are going to be licensed soon". Well we know this isn't true (as I mentioned above) and I literally jumped out of bed and wrote my first blog post. 

Today, five years later, as amazing at may sound, this still is not true. Mortgage originators who work at depository banks or credit unions are not held to the same standards as those of us who are not employed by those types of institutions per the SAFE Act. Bank and credit union mortgage originators are only required to be "registered" which is a far cry from what is required to be "licensed".  Some bank and credit union mortgage originators have opted (or may be required by their employers) to step up and be licensed instead of merely registered and I applaud this action. I think all mortgage loan originators who take a residential mortgage application should be held to same standards and should all be licensed. Consumers should not have to know what the differences are between licensed and registered mortgage originators and should be afforded the same protections regardless of who helps them with their mortgage. Ah…I digress.

I am so thankful for my readers. I had no idea what this blog would evolve to five years ago – I had no expectations. And now I cannot even imagine originating mortgages without being able to share information about mortgages! I have been so fortunate with the recognition and press I've received from my blogging efforts and even more so for the clients who have found me from Mortgage Porter.

THANK YOU, THANK YOU, THANK YOU!

2012 Conforming Loan Limits for Washington State Homes

Congress decided to keep the 2012 Conforming Limits at the existing 2008 levels instead of reverting to the higher “temporary” limits that we’ve experienced the past couple of years**.  In their infinite wisdom, Congress did restore the higher loan limits to FHA insured loans.  This means that in order to not have a jumbo loan in the greater Seattle area, your loan amount will need to be $506,000 and lower for conventional or $567,500 or lower for FHA insured mortgages.  I’ll be officially posting FHA insured loan limits soon.  

Four counties in Washington continue to have “high balance” loan limits above the “general” loan limits:

King County, Snohomish County and Pierce County:

  • 1 Unit: $506,000
  • 2 Unit: $647,750
  • 3 Unit: $783,000
  • 4 Unit: $973,100

San Juan County:

  • 1 Unit: $483,000
  • 2 Unit: $618,300
  • 3 Unit: $747,400
  • 4 Unit: $928,850

The remaining Washington counties have “general” loan limits:

Adams, Asotin, Bention, Chelan, Clallam, Clark, Columbia, Cowlitz, Douglas, Ferry, Franklin, Garfield, Grant, Grays Harbor, Island, Jefferson, Kitsap, Kittatas, Klickitat, Lewis, Mason, Okanogan, Pacific, Pend Oreille, Skagit, Skamania, Spokane, Stevens, Thurston, Wahkiakum, Walla Walla, Whatcom, Whitman and Yakima Counties:

  • 1 Unit: $417,000
  • 2 Unit: $533,850
  • 3 Unit: $645,300
  • 4 Unit: $801,950 

Loan amounts above the figures listed above are considered “jumbo” or “non-conforming”. 

**NOTE: Congress DID increase loan limits in one county in Connecticut for 2012.

VA Funding Fees…what briefly goes down, must quickly come back up.

Well the lower funding fees we thought we had were officially taken away when the President signed HR 674 raising the funding fees effective for VA loans closed November 22, 2011 through September 30, 2016.  The following is per Circular 26-11-19.

VA Funding Fees for Veterans 

First Time Use

Downpayment:

  • Less than 5%*:  2.15%
  • 5% but less than 10%:  1.50%
  • 10% or more:  1.25%    

Second and Subsequent Use

Downpayment:

  • Less than 5%*:  3.30%
  • 5% but less than 10%:  1.50%
  • 10% or more:  1.25%

VA Funding Fees for Reservist/National Guard 

First Time Use

Downpayment:

  • Less than 5%*:  2.40%
  • 5% but less than 10%:  1.75%
  • 10% or more:  1.50%    

Second and Subsequent Use

Downpayment:

  • Less than 5%*:  3.30%
  • 5% but less than 10%:  1.75%
  • 10% or more:  1.50%

Interest Rate Reductions (IRRL) are remaining at 0.50%.

I am happy to help you with your VA loan for your home located anywhere in Washington State.  A heartfelt thank you to those who have served our country.

Happy Thanksgiving

Happy Thanksgiving from my family to yours.

Thanksgiving

Just in from HUD on FHA Loan Limits

I've been following this because some folks I respect in the mortgage industry have been touting that the former higher "temporary" FHA loan limits are in effect as of November 18, 11.  Tonight I received this from HUD which would lead you to believe this is true:

FHA Update:

On November 18, 2011, the President signed into law H.R. 2112, Consolidated and Further Continuing Appropriations Act 2012 (HR2112). Section 238 of HR 2112 re-establishes the FHA loan limit at the higher of the dollar limit in Section 203(b)(2) or the dollar limit prescribed in Section 202 of the Economic Stimulus Act of 2008 for Forward mortgages.

Forward Mortgages:

Therefore, effective for all Forward mortgages with a case number assigned on, or after, November 18, 2011 through December 31, 2011, the loan limits referenced in Mortgagee letter 10-40 shall be in effect.

As a reminder, Mortgagee Letter 11-29 still applies to the time period 10/1/11 through 11/17/11:

  • Loans that did not have credit approval on, or before, 9/30/11 are subject to the lower limits that were in effect 10/1/11 through 11/17/11.
  • Loans that had credit approval on or before 9/30/11 and FHA to FHA refinances may be eligible for exceptions to those loan limits as defined in Mortgagee Letter 11-29.

The Department will be issuing a Mortgagee Letter by mid-next week that will include more detailed guidance and applicable updated loan limit tables for 2012. We expect supporting system changes to be completed within that same time frame.

With FHA loans, it's important to wait for the Mortgagee Letter or memo from HUD to confirm the change.  Once the ML letter is issued, FHA loans in Seattle will have the loan limit for 1-unit properties of $567,500 applies. 

As of now, Wednesday, November 23, 11, lenders (at least the major banks we work with) are not lending at the higher restored loan limit as of November 18, 2011. It appears this may change…we'll need to wait for the mortgagee letter from HUD and then wait to see when banks and wholesale lenders adopt the changes.

Stay tuned – I'll keep you posted.

Freddie Mac HomeSteps offers NEW Buyer Incentives

EDITORS NOTE: this post was written back in November 2011 – incentives may or may not be currently available.

Freddie Mac is sweetening the pot for qualified REO’s (Freddie Mac foreclosed homes) in Washington with their HomeSteps program.  HomeSteps SmartBuy provides buyers with a two year home warranty and up to 30% savings on new appliances.

What’s New? Freddie Mac is trying to warm up home sales with their Winter Sales Promotion.  Washington state has been added to this program!

Homebuyers may receive a credit of up to 3% towards closing cost for offers received between November 15, 2011 and January 31, 2012 that are closing on or before March 15, 2012. This is for owner occupied homes only.

Freddie Mac’s REO program, HomeSteps, is different than Fannie Mae’s Homepath. Fannie Mae offers special terms on their REO’s (foreclosed homes) however, Freddie Mac’s program is incentives for the buyer (no special financing programs).  Home buyers who are interested in buying a Freddie Mac HomeSteps property can use ANY type of financing, including conventional, FHA, VA or USDA.  

Click here for your rate quote for homes located in Washington State.

To see which homes are available for the HomeSteps program, you can search here. As of the publishing of this post, there are 53 Freddie Mac homes listed in Seattle; 209 homes in King County and 628 in Washington state.

If you are interested in buying a Freddie Mac HomeSteps property any where in Washington state and require a mortgage, I’m happy to help you!