Freddie Offers Cash Incentives for Buying Condos

Daily Real Estate News | Tuesday, August 16, 2011

 

Freddie Mac’s HomeSteps unit is offering cash to buyers willing to purchase one of its foreclosed condos that has been lingering on the market. HomeSteps is hoping to unload some of its high inventory of foreclosed condos through the incentive program, known as HomeSteps Condo Cash.

Through the “Condo Cash” program, condo buyers of HomeSteps properties can get up to $1,500 to help pay for standard home owner association dues.

The offer is only valid to owner-occupant buyers and on HomeStep condos that have been on the market for at least 120 days. To participate, buyers must submit offers between Aug. 15 and Nov. 15, and close escrow by Dec. 30. 

Some of the homes also come with a two-year Home Protect home warranty to cover electrical, plumbing, air conditioning, heating, and other major appliances and systems. Home Protect also is offering up to 30 percent discounts on the purchase of new appliances (see www.HomeSteps.com/smartbuy for more information).

Source: “HomeSteps Offers Condo Buyers Up to $1,500 for Future Association Dues for Limited Time,” Freddie Mac (Aug. 15, 2011)

Think Before You Cosign a Loan

Tighter lender standards and an unstable job market have made it tougher for some people,

especially those just starting out, to qualify for a home mortgage on their own. So, some home

buyers are turning to family members or close friends with good credit to co-sign a home loan.

Before you agree to cosign, consider these points.

• While becoming a cosigner may seem like a good solution, money manager and lenders caution against those who are asked to be the cosigner.
• A cosigner, even if not living in the house, is really a coborrower, meaning he or she still is responsible for payments if the occupant is unable to meet his or her obligations. In other words, if the principal party defaults on the loan, the cosigner is on the hook.
• One financial planner suggests potential cosigners take a less risky alternative, such as providing a cash gift for the down payment. Under current tax laws, a person can give as much as $13,000 to a person, free of gift taxes, or $26,000 per person, if a married couple filing jointly is giving the money.
• Those considering cosigning a mortgage must conduct due diligence. First, the cosigner must understand why the family member or friend is asking for help. Potential cosigners shouldn’t be afraid to look into the requestor’s personal finances to help determine whether he or she will be able to repay the loan. Perusing credit reports also will show the track record he or she has for paying off debts.
• A discussion about worst-case scenarios also should take place before signing on the dotted line. Working out a written contract containing an agreement about what would happen in the event of a default, also is recommended.
• Cosigners also should keep in mind that the mortgage will show up on their credit report, and could affect their own ability to borrow money or buy a second home. If the principal borrower makes a late payment, that also will show up on the cosigner’s report.

Read the full story:  http://www.nytimes.com/2011/08/07/realestate/co-signing-a-loan-mortgages.html?_r=1&ref=realestate

S&P Lowers Fannie, Freddie Credit Rating

Daily Real Estate News | Tuesday, August 09, 2011

 

Standard & Poor’s downgraded the credit rating of lenders backed by the federal government on the heels of the first-ever lowering of the U.S.’s credit rating. 

Fannie Mae, Freddie Mac, and other government-backed lenders were lowered one step from AAA to AA+, S&P reported in a statement issued Monday. Some analysts say the downgrade may force home buyers to pay higher mortgage rates. 

"The downgrades of Fannie Mae and Freddie Mac reflect their direct reliance on the U.S. government,” S&P said in a statement. “Fannie Mae and Freddie Mac were placed into conservatorship in September 2008 and their ability to fund operations relies heavily on the U.S. government.”

The GSEs own or guarantee more than half of U.S. mortgage debt.

Freddie Mac said that the lower debt rating will cause “major disruptions” in its home-lending by possibly reducing the supply of mortgages it can purchase. It said in a Securities and Exchange Commission filing that the lower rating could hamper home prices and even lead to more home-loan defaults on mortgages it guarantees. 

Meanwhile, the Federal Housing Finance Agency on Monday assured investors that securities issued by GSEs are sound. "The government commitment to ensure Fannie Mae and Freddie Mac have sufficient capital to meet their obligations, as provided for in the Treasury's senior preferred stock purchase agreement with each enterprise, remains unaffected by the Standard & Poor's action," said Edward DeMarco, FHFA acting director.

Some analysts and lenders have said they don’t see the fallout from the S&P downgrade on the U.S. and other banks as having such a widespread affect. "It's likely that once the storm passes, you'll get an increase in mortgage rates because of this, but it won't be significant,” says Anika Khan, a housing economist at Wells Fargo.

S&P also announced on Monday that it had lowered its credit ratings for 10 of 12 federal home loan banks and federal farm credit banks from AAA to AA+.

Source: “S&P Lowers Fannie, Freddie Citing Reliance on Government,” Bloomberg (Aug. 8, 2011); “S&P Downgrades Fannie and Freddie, Farm Lenders and Bank Debt Backed by U.S. Government,” Associated Press (Aug. 8, 2011); “Freddie Mac Reports $4.7B Loss, Says S&P Downgrade Will Disrupt Mortgage Market,” Associated Press (Aug. 8, 2011); and “FHFA Assures Investors After Fannie, Freddie Downgrade,” HousingWire (Aug. 8. 2011)

Reprinted from REALTOR^® Magazine Online, August, 2011, with permission of the NATIONAL ASSOCIATION OF REALTORS^®. Copyright 2011. All rights reserved. http://realtormag.realtor.org.

Distressed BofA Homeowners in Calif. Now Have Chance of Principal Reduction

San Diego Union-Tribune

Bank of America has joined the Keep Your Home California principal-reduction program, making it the largest loan servicer involved in lowering loan balances for those with economic hardships.

Keep Your Home California is a program offered through the California Housing Finance Agency to help struggling homeowners avoid foreclosure.

Bank of America, which services more than two million home loans in California, joins others servicers involved in the program, including: California Dept. of Veterans Affairs, the California Housing Finance Agency, Community Trust/Self Help, GMAC, Guild Mortgage Company, and Vericrest Financial. Agency officials hope the list will continue to grow, and that the program will continue to gain momentum.

Under the program, qualified homeowners may be eligible for up to $50,000 in assistance. The program requires the mortgage investor to match dollar-for-dollar the amount provided by the program.

Bank of America borrowers who do not qualify for the principal-reduction program will be evaluated by bank representatives to explore other options, including a loan modification.

To be eligible for the program, applicants must: Own and occupy their homes as their primary residence; not exceed $729,750 in current unpaid principal balances on first mortgages; meet low- and moderate-income limits; complete and sign a hardship affidavit to document reasons for hardships; have mortgage loans that are delinquent or “in imminent default;” and have enough income to pay modified mortgage payments according to guidelines from servicers participating in the programs.

For more information about Keep Your Home California, visit keepyourhomecalifornia.org or call (888) 954-5337(KEEP).

Read the full story

http://www.signonsandiego.com/news/2011/jul/28/distressed-bofa-borrowers-calif-now-havechance-

pr/

Rural Buyers Can Get No-Down Payment Loans

Daily Real Estate News | Wednesday, August 03, 2011

 

Total Mortgage Services, a national mortgage lender, is offering rural home buyers 100 percent financing or closing cost assistance.

Through its new Guaranteed Rural Housing Loan Program, insured by the U.S. Department of Agriculture, the lender will offer low- and moderate-income residents living in rural areas (usually defined by a population of 10,000 or less or, in some cases, 20,000 or less) several affordable housing finance options:

• No down payment required.
• Closing costs can come from any source, including gifts.
• Competitive 30-year fixed rates.
• No monthly mortgage insurance premiums.

Borrowers can obtain a loan to purchase a new or existing home that is located in a designated rural area.

“The USDA home loan program is one of the most compelling mortgage products in today’s challenging mortgage marketplace and offers real solutions for rural borrowers, especially those in need of 100 percent financing or with lower credit scores," John Walsh, president of Total Mortgage, said in a statement.

To read more about eligibility requirements, visit the U.S. Department of Agriculture Rural Development Web site.

By REALTOR® Magazine Online