HVCC: Why Should YOU Care?

June 6, 2009 by 7 Comments

You may or may not have heard about HVCC.  You'll have the opportunity to learn about it first hand if you obtain a conventional mortgage.  In a nutshell, mortgage originators and processors (anyone considered to be in "production") are no longer allowed to order appraisals or know who the appraiser willbe until AFTER they receive the appraisal.  HVCC just went into effect in May, I wrote a post about my experience at Rain City Guide where a Real Estate Agent asked me:

If I understand you correctly:

  1. We don’t know who the appraiser is
  2. We cannot contact the appraiser even if we knew.   [Note:  the real estate agent CAN contact the appraiser if they somehow know who it is…the loan production staff cannot].
  3. We have no idea when the appraisal will be done.

The Home Value Code of Conduct was created as a result of the New York Attorney General investigating Washington Mutual (once a large bank) and eAppraiseit (an appraisal management company) for manipulating appraisers to produce higher values. 

HVCC was suppose to create a professional distance between mortgage originators and appraisers so that an appraiser could perform their task without pressures to produce a higher value.  Appraisals now go through an appraisal management company (which take on average 40% of the appraisal fee from the appraiser) to create this distance and supposedly reduce any conflicts of interest.  However, the code was amended to allow AMCs (appraisal management companies) to be owned by the very banks who are ordering the appraisals. 

From Fannie Mae's HVCC FAQs update on May 9, 2009 (Question 36):

Q. May an AMC Affiliate with, or that owns or is owned in whole or part by the lender or a lender-affiliate, order appraisals?

A: Yes, an AMC affiliated with, or that owns or is owned in whole or part by the lender or a lender affiliate, may order appraisals…

This smacks of the WaMU eAppraiseit scenario all over again!

So big bank owns an AMC where they order all their appraisals through and if a mortgage originator is brokering a loan to that big bank, the appraisal may be ordered through that AMC.  Big bank/title company collects an average of 40% of the appraisal fee from the appraiser just for ordering the appraisal.  If an appraisal cost $500; the AMC keeps $200 just for controlling and placing the order.  The appraiser, who once collected $500 for producing the report now receives $300.  Many appraisers are having to increase appraisal fees in order to make a living since AMCs are stripping them of 40% of their income. 

Instead of being able to select an appraiser by their qualifications, experience or expertise in a certain area; it's a crap-shoot based on which appraisers are participating (agreeing to lower compensation) with the AMCs.  

From CNBC's Diana Olick on the impact of HVCC:

"As many brokers expected, the HVCC is also resulting in some lower appraisals. Since the appraisers now may be unfamiliar with the local market, they will err on the lower side. Of course it may also be that the lack of a relationship with the lender is removing the 'expectation' of a certain appraised value. If the appraisal comes in lower than the sale price, then the deal is off."

HVCC does not allow second appraisals to be ordered due to low appraisal as it's considered "value shopping".  

With a refinance, no value can be provided to the appraiser–I can't even let the appraiser know what the home owner thinks the value of their home may be.  The home owner, if the appraisal comes in low, is out the appraisal fee (typically around $500).  

The National Association of Mortgage Brokers has been trying to battle this code with strong political opposition.  (NOTE to Mortgage Originators: NOW is the time to belong to your local chapter of NAMB if you care about the future of your industry).

The intentions of HVCC to stop the strong-arming of appraisers to create false values are good.  The results are terrible and many of us are trying to have this reversed.  I encourage you to please sign this petition and to contact your representatives in Congress.   

HVCC is going to hurt the consumer and will only help pad the pockets the owners of the Appraisal Management Companies.  

Filed Under: Appraisals, Fannie, Freddie and FHFA

Making Home Affordable Refinance – Can I Help You? Maybe…Maybe Not.

April 4, 2009 by 11 Comments

UPDATE JUNE 19, 2010:  The Home Affordable Refinance Program has become much easier to do since writing this post with both Fannie Mae and Freddie Mac securitized mortgages.  This post is pretty outdated (the hazards of writing about mortgages on a blog!)  If you need help with refinancing your home in Washington, please contact me.

Here is an updated information on Fannie Mae's Home Affordable Refi.

NOTE:  This program is still "evolving". Wholesale lenders/banks and private mortgage insurance companies are still issuing and revising their guidelines.  I'll try to update this post with current information as I receive it.

Fannie Mae will be implementing the Making Home Affordable Refi starting April 4, 2009.  Some home owners will be free to use any mortgage professional (as long as they are Fannie Mae approved) and others will be forced to return to their mortgage servicer.

First of all, I am only licensed to provide residential mortgages for homes located in Washington State.

UPDATE: IF YOUR MORTGAGE IS OWNED BY FREDDIE MAC, I MAY BE ABLE TO HELP YOU.  YOU DO NOT HAVE TO GO TO YOUR MORTGAGE SERVICER (WHO YOU MAKE YOUR PAYMENTS TO).

Currently, for the Home Affordable Refinance, Freddie Mac is requiring that home owners return to their mortgage servicer.  To determine if your mortgage is owned by Freddie Mac, click here. If your mortgage is owned by Freddie Mac, I probably cannot help you with an Making Home Affordable refinance.   However if your current mortgage is owned by Freddie Mac and you have home equity (you're not upside down); I may be able to help you.   Fannie Mae has a larger market-share than Freddie Mac…odds are in your favor, but check Freddie Mac first.  UPDATE:  Since writing this post, one major bank has informed us they will allow us to originate Home Affordable/Freddie Mac mortgages as long as we broker the loan back to them. 

If your mortgage is not owned by Freddie Mac, the next step is to see if it's owned by Fannie Mae. You can determine that by clicking here.   Unlike Freddie Mac, Fannie Mae is allowing home owners to use eligible mortgage brokers, bankers and correspondent lenders of their choice.  If your mortgage is owned by Fannie Mae (and your home is in WA); I may be able to assist you with your Home Affordable refinance.

Here are some important pointers about Fannie Mae's Home Affordable refinance (homes at a higher loan to value):

  • Second mortgages must be subordinated.  They may not be included (paid off) with the home affordable refinance.
  • Borrowers on the existing mortgage must match the new mortgage.  Borrowers may be added but they may not be removed.   UPDATE:  Borrowers can be removed under certain circumstances.
  • If a borrower currently has lender paid mortgage insurance (a slightly higher rate that financed private mortgage insurance) they may have to return to their mortgage servicer (who they make their mortgage payments to) for a Home Affordable refinance.  

What if your existing mortgage is FHA or VA?  You may qualify for a FHA or VA Streamline refinance which may not require an appraisal or income verification (you will need a mid-credit score of 620 or higher).

Lenders are currently inundated with refinance and purchase business due to the current low mortgage rates.   I encourage you to apply early and be very patient.   Washington State home owners can apply using my secure on-line application under "Favorite Links".

The bottom line is, if your home is in Washington I can at the very least help point you in the right direction and at the most, I can help you with your new refinance.

Filed Under: Fannie, Freddie and FHFA, Refinance

Revised 2009 Conforming Loan Limits for Washington State

February 23, 2009 by Leave a Comment

Conforming loan limits are tiered with some areas qualifying as "high cost" and provided a second level before being considered a "jumbo" loan.  Today, FHFA announced the new limits aka "Conforming High Balance" or "Agency Jumbo".

King, Pierce and Snohomish Counties

$567,500 – 1 Unit

$726,500 – 2 Unit

$878,150 – 3 Unit

$1,091,350 – 4 Unit

Jefferson County

$437,500 – 1 Unit

$560,500 – 2 Unit

$677,000  – 3 Unit

$841,350 – 4 Unit

Kitsap County

$475,000 – 1 Unit

$608,100 – 2 Unit

$735,050 – 3 Unit

$913,450 – 4 Unit

San Juan County

$593,750 – 1 Unit

$760,100 – 2 Unit

$918,800 – 3 Unit

$1,141,850 – 4 Unit

Skamania and Clark Counties

$418,750 – 1 Unit

$536,050 – 2 Unit

$648,000 – 3 Unit

$805,300 – 4 Unit

Conforming loan limits (true) and for all other Washington counties not listed above:

$417,000 – 1 Unit

$533,850 – 2 Unit

$645,300 – 3 Unit

$801,950 – 4 Unit

 

 

Filed Under: Fannie, Freddie and FHFA

Upside down in your home with good credit? March 4, 2009 may be an important date for you.

February 23, 2009 by Leave a Comment

Just received this email, which I'm sure echos the thoughts of many home owners:

"Been meaning to contact you to get your take on the recent wholesale changes that are coming hard and fast at the mortgage bankers out there and, of course, see if there can be any benefit to a re-fi given the new lending "rules" (for lack of a better term). We're horribly upside-down on our current loan balance vs. current home value, so we don't know what can happen for us, if anything. But if there's a way to get that rate down and send out less each month. we're listening! What do you think about all this?"

Last week, President Obama announced his plans to help stimulate the economy and help provide stability with America's housing.  With the Homeowner Affordibility and Stability Plan, home owners who are "credit worthy" may be able to refinance their home up to 105% loan to value. 

On March 4, 2009, more details are suppose to be announced.  Here's what we understand so far:

  • The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

  • First mortgage may not be more than 105% of the value of the property. 

  • Borrowers with a second mortgage may still be able to refinance if the second mortgage lien holder is willing to remain in second lien position and if the borrower still qualifies.

  • The program will offer 30 year or 15 year fixed interest rates based on market rates.

  • The program only applies to the home you live in.  It does not apply towards vacation or second homes or investment properties.

According the the Treasury, this program will not be available until March 4, 2009.  Lenders will become even more buried with refinance business once this happens.  It is to your advantage to be prepared.  By gathering the following information:

  • 2008 W2s (if self employed or paid commission, 2 years of complete tax returns)
  • Most recent paystubs covering 30 days of income.

  • Most recent mortgage statements.

  • Information on current monthly debts including amount paid monthly and amount owed.

  • Most recent bank statements/asset accounts (all pages).

If your home is located in Washington State, you can apply on line now by clicking the link under my photo.  However, I don't anticipate having more details until March 4, 2009.

More to follow.

Filed Under: Debt Restructuring, Economy, Fannie, Freddie and FHFA, Mortgage, Refinance

Got Stimulus?

February 19, 2009 by Leave a Comment

Earlier this week, President Obama signed H.R. 1, The American Recovery and Reinvestment Act of 2009, to the tune of $787,000,000,000. This is roughly the same as giving every American man, woman and child $2,500.  President Obama announced that we can see how the funds are being spent by visiting www.recovery.gov.

Here are a few items designed to help the housing markets:

Loan Limits to be Reversed 2008.  At the end of 2008, the conforming jumbo limits were replaced with conforming high balance.  In the Seattle area, this meant that the fine line between a jumbo and conforming mortgage went from $567,500 to $506,000 for a single family dwelling.  Watch for Fannie, Freddie and FHA to implement the higher loan limits soon through December 31, 2009.

2009 Tax Credit for First Time Homebuyers. A tax credit up to $8000 is available to first time home buyers (someone who has not owned a home in the past 36 months) who close on a home between January 1, 2009 – November 30, 2009.  Unlike the 2008 plan, this tax credit does not have to be paid back.

NOTE:  If you are a qualified first time home buyer who bought a home from April 9, 2008 – December 31, 2008; you're still under the original plan with the $7,500 credit which requires you to pay it back (interest free loan).  

More to follow….much more.

Filed Under: Fannie, Freddie and FHFA, FHA, Legislation

Condo’s Getting Spanked by Fannie

January 12, 2009 by 2 Comments

iStock_000061440694_MediumFannie Mae’s latest hits to rate will be implemented by lenders any day.  Condominiums are really getting spanked with a 0.75% add to fee if there is less than 25% home equity in the property.  This will apply to both purchases and refinances for any mortgage except those amortized 15 years or less.

 

If you are considering refinancing your condo, contact your local mortgage professional right away (I can help you if you’re located in Washington state)…if you’re in the process of buying a condo and are “floating” your interest rate, I highly recommend considering locking.

PS:  Cash-out refinances are also getting whammo’d by Fannie.  Don’t wait!

Filed Under: Condos, Fannie, Freddie and FHFA, Mortgage, Refinance, Residential Purchase Tagged With: ,

Fannie Mae: The Hits to Rate Keep Coming

January 9, 2009 by Leave a Comment

Fannie Mae has announced new "hits to rate" that will take place on mortgages they purchase effective April 1, 2009.  This means that lenders will start to implement these increases ANY TIME since loans originated today may be bought by Fannie around the effective date for the new increased pricing.  No lender wants to be an April Fool and in position of having to make up for the difference in price when the loan is sold. 

Below is an example of some of the hits to pricing rates.  You can see why Mortgage Professionals should not rattle off rate quotes without having detailed information of the borrower.  If a couple (or single borrower) has a low-mid credit score of 720-739 and they are putting 20% down (LTV 75.01-80%) they can pay 0.25% more in fee than a borrower with a 740+ mid score or the 0.25% will be factored into the interest rate (currently running about 0.125% to rate).

Agency Products 

LTV
LTV
LTV
LTV
LTV
LTV
LTV
FICO
<=60%
60.01-70%
70.01-75%
75.01-80%
80.01-85%
85.01-95
>95%
>=740
+0.25
0.00
0.00
0.00
0.00
0.00
0.00
720-739
+0.25
0.00
0.00
-0.25
0.00
0.00
0.00
700-719
+0.25
-0.50
-0.50
-0.75
-0.50
-0.50
-0.50
680-699
0.00
-0.50
-1.00
-1.50
-1.00
-0.75
-0.50
660-679
0.00
-1.00
-2.00
-2.50
-2.25
-1.75
-1.25
640-659
-0.50
-1.25
-2.50
-3.00
-2.75
-2.25
-1.75
620-639
-0.50
-1.50
-3.00
-3.00
-3.00
-2.75
-2.50
<620
-0.50
-1.50
-3.00
-3.00
-3.00
-3.00
-3.00

Cash-Out Refinance

LTV
LTV
LTV
LTV
LTV
LTV
LTV
FICO
<=60%
60.01-70%
70.01-75%
75.01-80%
80.01-85%
85.01-90%
>90%
>=740
0.00
-0.25
-0.25
-0.50
-0.625
-0.625
N/A
700-739
0.00
-0.625
-0.625
-0.75
-1.50
-1.00
N/A
680-699
0.00
-0.75
-0.75
-1.375
-2.50
-2.00
N/A
660-679
-0.25
-0.75
-0.75
-1.50
-2.50
-2.00
N/A
640-659
-0.25
-1.25
-1.25
-2.25
-3.00
-2.50
N/A
620-639
-0.25
-1.25
-1.25
-2.75
-3.00
-2.50
N/A
<620
-1.25
-2.25
-2.25
-2.75
-3.00
-3.00
N/A

Condominium and Cooperative Property Types

Adjustment Name
Old Adjustment
New Adjustment
LTV >75%
N/A
-0.75

Here are the current (soon to be former) price adjustments from Fannie.

Filed Under: Fannie, Freddie and FHFA, Interest Rates

Fannie and Freddie Suspend Foreclosures

November 20, 2008 by Leave a Comment

Statement from FHFA James B. Lockhart:

“The foreclosure suspension announced today by Fannie Mae and Freddie Mac will help homeowners and servicers utilize the new streamlined loan modification program (SMP) announced by FHFA, Fannie Mae, Freddie Mac and HOPE Now. With this suspension, seriously delinquent borrowers may have an opportunity to avoid foreclosure and work out terms to stay in their homes.”

According to Fannie Mae’s press release, this suspension will take place from November 26, 2008 – January 9, 2008 for owner occupied, single family dwellings for home owners who have not filed for bankruptcy and who has missed three or more payments.

Related Post: Fannie and Freddie’s New Deal

Filed Under: Fannie, Freddie and FHFA
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