Wednesday, November 26, 2014

FHA Allows Ex-Owners to Buy Back Homes

The Federal Housing Finance Agency announced a new policy that will permit some foreclosed home owners to purchase the homes back that they once had lost at fair market value. 
The FHFA, the regulator of Fannie Mae and Freddie Mac, says the new policy likely will lower the principal on the loans of the former home owners if they elect to buy their former homes back. Prior to the policy, the FHFA had required borrowers who had gone through foreclosure and who wanted to buy back their home to pay the entire debt they owed on the mortgage, even if it was much higher than the home’s current value.  To regain ownership, the ex-owners must be able to pay the full current value of the property, and they still must wait at least three years after their foreclosure to regain ownership, which is required to purchase any home using a Freddie Mac or Fannie Mae–guaranteed loan following a foreclosure. 
“This is a targeted but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” says FHFA Director Melvin L. Watt. “It expands the number of potential buyers of REO properties and is consistent with the enterprises’ practice of requiring fair-market value for those properties.”
The new policy applies only to buyers’ former primary residence. Second homes and investor properties are not eligible. 

Monday, November 17, 2014

Credit Unions Step in to Fill Lending Void

DAILY REAL ESTATE NEWS | MONDAY, NOVEMBER 17, 2014
The number of mortgage originations issued from credit unions in the first half of 2014 has climbed 10 percent year-over-year. This has elevated credit unions to having more than 8 percent share of the home loan market—about triple their share prior to the recession—making them a growing option for home buyers looking for financing, according to data from the Credit Union National Association.
In June, the nation’s 6,557 credit unions surpassed 100 million members (you still have to be a member of one to get a loan, but many credit unions are tied to employment, trades, religious groups, or specific communities). Nearly two-thirds of credit unions offer mortgages.
“We’ve seen a very strong increase in originations over the course of the last several years,” Mike Schenk, vice president of economics and research at CUNA, told the Los Angeles Times.
Mortgages comprise about 41 percent of all credit union loans compared to 25 percent in 2000. The average loan amount at a credit union is $130,000, and 70 percent of the loans offered are for 30-year fixed-rate mortgages. But many credit unions do offer different financing options for members. For example, Pentagon Federal, with 1.3 million members nationwide, introduced a 15/15 adjustable mortgage, where rates reset only once at the midterm mark to reflect the current market rate. Also, the National Institutes of Health Federal CU offers the five-year fixed-rate mortgage, dubbed the “see ya” loan, which allows home owners to refinance and coordinate it to a time of a special event, such as retirement or when the children go to college, in order to end their mortgage payments by that time.
Credit unions don’t typically charge cheaper interest rates, but they “tend not to tack on a bunch of superfluous fees that other lenders seem to love,” the Los Angeles Times notes in a recent article. “And because they are local and member-controlled, they are more likely to consider applicants with a story to tell than some underwriter five states over who is forced to stick to standard guidelines.”
Source: “Shopping for a Loan? Credit Unions Can be Consumer-Friendly Option,” Los Angeles Times (Nov. 9, 2014)