If you’re unfamiliar with the HomePath mortgage program, here are the deets.

Here is the press release:

WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010.

You can search for Fannie Mae HomePath specific properties on their website.

The TC Daily Planet has an article about a new mortgage scam/fraud making it’s way around the Twin Cities metro area.

With the foreclosure rate in the metro area still soaring, struggling homeowners face a new and more sinister threat – unscrupulous scam artists.  With ads claiming they can help you keep your home while eliminating your mortgage and property tax, a group calling themselves “Slavery to Sovereignty” is the latest in a long line to take advantage of residents who are desperate for help.

Read the full article to get the gist of the scam by David Kaplan.

Here is the release from HUD.

If you are unfamiliar with the seasoning rule, it is meant for an arms-length transaction for all parties.

The overall goal for a property investor that is flipping houses is to buy low, throw some money at house and  sell high, along with having the property for the least amount of time. Here lies a small problem, when the seasoning rule was first introduced FHA wouldn’t insure a home loan if it had changed hands of title unless the previous owner had ownership of 90 days or more.

Being that a large buyer pool are using FHA loans, no-go on getting in on freshly renovated properties that are agressiveley priced and are actually selling.

The overall goal is to move FHA-REO properties a lot quicker and stabilize market conditions.

Good for both buyers and flippers.

It comes to no surprise that FHA is going to be changing it’s lending requirements in the upcoming new year. With Federal Housing Administration playing a crucial roll in propping up the housing market, they too are facing possible shortages in cash and who else to raise money from than new home buyers.

Changes For Buyers

None of these are set in stone, but the bottom line is it will be more expensive to buy a home from the loan side. From the seller side of the transaction, if buyers can’t qualify the pool of buyers shrink making it harder to sell the property.

Here is what at stake:

• Talks of mortgage insurance premiums going up. Right now, buyers pay 1.75% on the overall loan amount that can be rolled into the loan or paid upfront plus a yearly fee until the mortgagor has reached a certain equity position. Here is a simple example, if a home costs $200,000 there is a $3,500 fee. If the fee increases to say 2.25%, that fee increases to $4500. An extra $1000 out of pocket to buyers.
• A new credit floor, FHA has always been more lenient when it comes to qualifiying for a loan. Better be ready to really get your credit score shored up. Pay off some cards before or bring down the percentage owed on the overall credit limit.
• Sellers  can currently contribute up to 6% for closing costs, the traditional is 3% but looks like the anchoring that down is what they are after.
• More money for a down payment. FHA requires a minimum of 3.5% for a down payment
• Give the boot to crappy lenders that abuse.

If this is a “recovery” we are currently in, let’s hope they don’t destroy it.

For The Good

If most of these happen, it will be for the good. Of course many Realtors(r) might not agree, but they should. Home ownership needs to be sustainable again, a lot of people may have been ill-equipped when it came to owning a home.

When a small down payment is used, the odds are that the new homewoner doesn’t have large cash reserves. It’s easier to walk away from a home when only 3.5% was used for the initial investment than say 10% or 20%.

Here’s to another interesting 2010 when it comes to the mortgages!

As of last check, there are currently 50 home loans still available under the program. The program originally had set aside funds for 200 loans in areas of the cities where foreclosures are high.

The nuts of the deal are a $10,000 loan with zero interest that is forgiven after 5 years if you still occupy the residence.. Use the funds as you wish with helping towards closing costs, down payment or used towards fixing up the property.

Get the details

As with any program, there are guidelines in order to qualify but they are not bad… just some income requirements and not all neighborhoods are eligible.

There is no sale price limit and the funds can be used towards a single family residence or duplex. Home buyers must participate in a homeownership training program available through HomeStretch.

Now for the random income requirement that nobody will ever figure out except for the one that created them.

• If you make less than $64,720 which is less than 80 % of the median area income, then check out this link for qualifications.
• If you make less than $97,080 which is less than 120% of the median area income, then check out this program for qualifications.

You can also piggy back on the funds with the $8000 dollar tax credit that is available to first time home buyers, but time is running out so if you are still contemplating on using some Obama $$ you might want to start soon.

Another one of the requirements that must be complete in order to secure funds is a signed and executed purchase agreement.

Click here for complete requirements in the program.

Unlike the famed housing tax credit for first time home buyers, you do not need to be one for this program.

If you thinking about the program or just have  some questions, drop a comment below or reach out here and I will get you pointed in the right direction.

Some local neighborhood subdivisions have hit a wall as far as construction goes and for some borrowers with great credit it is next to impossible to grab a business loan.

Will have to get out to a few of the neighborhoods mentioned in the article and get some video.

Most definitely got over their head and this quote says it all from the article: “”Real estate is the cocaine of the banking business.” Hopefully lessons learned but will take years to recover.

From the StarTrib

In Minnesota, regulators have seized and closed two banks since 2008 and have ordered 16 others to clean up their balance sheets. Another 65 of the state’s 430 banks and thrifts are on a secret watch list, and state banking officials expect more to fail as they are pulled down by bad real estate loans.

No doubt small local banks bet heavy on commercial and residential real estate, often leveraging themselves to the point with hardly any assets on the books.

Minnesota Bank Failure Poll

If you haven’t already please read the article first, but based on predicted amount of closings… how many do you think will shut this year?

photo cred startrib

After you apply for your mortgage quotes from these sites, you might get a barrage of quotes from different lending institutions or mortgage brokers but hindsight is all of them have to give you straight forward quote or otherwise risk not earning you business.

So instead of getting a bloated interest rate with a high yield spread premium, hopefully you get a honest and upfront quote to choose from.

Where to find your next mortgage online

The new way to shop for mortgages. Get a quote(s) back in minutes and compare against others.

Zillow’s Mortgage Marketplace – Get anonymous quotes from lenders/brokers competing for you biz. Get help from the help center, view live mortgage rates and try out the mortgage calculators.

Smarthippo -Is a community where consumers can ask questions and shop for the best mortgage rates.

RateSpeed – A mortgage search engine that searches lender’s rates and returns the best possible prices. Allows the consumer to see the wholesale rate without any manipulation.

RateWindow -Another site to get home loan pricing.

LendingTree -A new look  and appears to be your one stop shop for everything.

(h/t Calculated Risk)

So it looks like this $8000 Tax Credit will be available for down payment after all. The idea first came up a couple of weeks back about being able to use the tax credit towards a down payment but then it looked like the details came out to soon and it was pulled of the table.

HUD released a new statement today and the Federal Housing Administration (FHA) laid out the details. Now home buyers can get instant gratification out of the tax credit incentive if so desired. The big kicker to the $8000 tax credit being used as a down payment is you still have to come up with the required FHA minimum 3.5% down for the payment. The home buyer tax credit can also be used for closing costs.

You can view HUD Mortgagee letters along with form 9-15, which covers all the information for the housing tax credit. All the guidelines for FHA-insured mortgages are included in form 9-15, which would be details on federal, state and non profit agencies dealing with the tax credit.

FHA has a list of approved lenders that can use the bridge loan type product.

Although I don’t see a big overall impact to the Minneapolis/St. Paul real estate market, it does give first-time home buyers another option when it comes to purchasing a home. As a reminder that this $8000 home tax credit is outta here by December 1st, 2009 which for some seems like it is coming up fast (about 5 months until to December, weird to think about).

If you are thinking about doing something, don’t wait until the last minute If you have any questions just let me hear it.

Long story short, government buying up mortgage backed securities hoping to keep interest rates low has sorta backfired as numerous reports show the MBS investments continue to sour due to more delinquencies. I’m sure a few other stories warranted it as well but the artificically manipulating the market was probably the biggest kicker.

Most knew these low rates were not here to stay as more towards the last quarter is when they prediticted interest rates would begin to increase. This kinda of came out of nowhere as rates increased .5625% in one day.

Where to go from here

If you are still in the market for a house, you are in luck… plenty to still  go around but a decrease in inventory means there are only about 6 houses per buyer. Finding that low interest rate might not happen for awhile unless the feds inject more $$$ into the purchasing of MBS to try and drive rates downward again.

Still continue to look for Twin Cities real estate and if you have any questions just let me know.