Super Conforming Loan Limits:
http://activerain.com/blogsview/1721131/what-is-a-super-conforming-loan-what-are-the-loan-limits-per-county
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Dana Bain & Robin Bain cover all of MA & NH 800-480-0545 978-422-2311
A super conforming mortgage loan is a term coined by Fannie Mae and Freddie Mac for mortgages in certain parts of the country that are more expensive areas to live. Fannie and Freddie have a mortgage limit of $417,000 in most parts of the country, and anything above that figure they will not buy because it is considered a jumbo loan. Because of the appreciation in home values, certain areas can now apply for loans up to $625,000 and even $729,000 because of the high cost of homes.
2009 Super-Conforming First Mortgage Loan Limits Up to $729,750 Now Available in High-Cost Areas
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (“ARRA”) which established “high-cost” area conforming loan limits (termed ‘Super-Conforming’) in specific counties in addition to the standard conforming loan limits. Please contact your Financial Advisor for more information about Super-Conforming loans.
ARRA High-Cost AreaLoan Limits
COUNTY NAME
STATE
ONE-UNIT LIMIT
Coconino County
AZ
$450,000
Alameda County
CA
$729,750
Alpine County
$547,500
Amador County
$443,750
Calaveras County
$462,500
Contra Costa County
El Dorado County
$580,000
Inyo County
$437,500
Los Angeles County
Madera County
$425,000
Marin County
Mendocino County
$512,500
Merced County
$472,500
Mono County
$529,000
Monterey County
Napa County
Nevada County
$562,500
Orange County
Placer County
Riverside County
$500,000
Sacramento County
San Benito County
San Bernardino County
San Diego County
$697,500
San Francisco County
San Joaquin County
$488,750
San Luis Obispo County
$687,500
San Mateo County
Santa Barbara County
Santa Clara County
Santa Cruz County
Shasta County
$423,750
Solano County
$557,500
Sonoma County
$662,500
Stanislaus County
Sutter County
Tuolumne County
Ventura County
Yolo County
Yuba County
Boulder County
CO
$460,000
Eagle County
Garfield County
Gunnison County
$433,750
Hinsdale County
La Plata County
Lake County
Ouray County
$482,500
Pitkin County
Routt County
$675,000
San Juan County
San Miguel County
$651,250
Summit County
Weld County
$417,500
Fairfield County
CT
$708,750
Hartford County
$440,000
Middlesex County
Tolland County
New Castle County
DE
$420,000
District of Columbia
DC
Broward County
FL
Collier County
$531,250
Manatee County
$442,500
Miami-Dade County
Monroe County
Palm Beach County
Sarasota County
Greene County
GA
Hawaii County
HI
$625,500
Honolulu County
$793,750
Kalawao County
$716,250
Kauai County
$773,750
Maui County
$790,000
Blaine County
ID
Teton County
$693,750
Valley County
Anne Arundel County
MD
$560,000
Baltimore City
Baltimore County
Calvert County
Carroll County
Cecil County
Charles County
Frederick County
Garrett County
Harford County
Howard County
Montgomery County
Prince George’s County
Queen Anne’s County
Talbot County
Worcester County
MA
Barnstable County
Bristol County
$475,000
Dukes County
Essex County
$523,750
Nantucket County
Norfolk County
Plymouth County
Suffolk County
Douglas County
NV
$468,750
Rockingham County
NH
Strafford County
Atlantic County
NJ
$453,750
Bergen County
Burlington County
Camden County
Cape May County
$487,500
Gloucester County
Hudson County
Hunterdon County
Mercer County
Monmouth County
Morris County
Ocean County
Passaic County
Salem County
Somerset County
Sussex County
Union County
Santa Fe County
NM
$427,500
Bronx County
NY
Dutchess County
Kings County
Nassau County
New York County
Putnam County
Queens County
Richmond County
Rockland County
Westchester County
NC
Currituck County
$458,850
Dare County
Hyde County
$483,000
Pasquotank County
Perquimans County
Athens County
OH
$432,500
Clackamas County
OR
$418,750
Columbia County
Deschutes County
$447,500
Jackson County
$422,500
Multnomah County
Washington County
Yamhill County
Bucks County
PA
Chester County
Delaware County
Philadelphia County
Pike County
York County
RI
Kent County
Newport County
Providence County
Cannon County
TN
Cheatham County
Davidson County
Dickson County
Hickman County
Macon County
Robertson County
Rutherford County
Smith County
Sumner County
Trousdale County
Williamson County
Wilson County
Salt Lake County
UT
Tooele County
Wasatch County
$431,250
Albemarle County
VA
$437,000
Alexandria City
Amelia County
$535,900
Arlington County
Caroline County
Charles City County
Charlottesville City
Chesapeake City
Chesterfield County
Clarke County
Colonial Heights City
Cumberland County
Dinwiddie County
Fairfax City
Fairfax County
Falls Church City
Fauquier County
Fluvanna County
Fredericksburg City
Goochland County
Hampton City
Hanover County
Henrico County
Hopewell City
Isle of Wight County
James City County
King and Queen County
King William County
Lancaster County
$545,000
Loudoun County
Louisa County
Manassas City
Manassas Park City
Mathews County
Nelson County
New Kent County
Newport News City
Norfolk City
Petersburg City
Poquoson City
Portsmouth City
Powhatan County
Prince George County
Prince William County
Richmond City
Spotsylvania County
Stafford County
Suffolk City
Surry County
Virginia Beach City
Warren County
Williamsburg City
Winchester City
Clark County
WA
Jefferson County
King County
$567,500
Kitsap County
Pierce County
$593,750
Skamania County
Snohomish County
Hampshire County
WV
Dana K. Bain
President
MLO 18693
www.PremiereMortgageServicesInc.com
www.BainMortgage.com
11 Malvern Hill Road
Sterling, MA 01564
Phone: (978) 422-2311
Toll Free: (800) 480-0545
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Licensed by the State of NH Banking Dept. Lic. No. 5430-MBR
Tanya is a self-employed writer with solid credit and enough savings to put 30 percent down on her chosen Connecticut house. But for the past year, no lender would approve her. Then one got personal.
While dissecting the account she shares with her boyfriend, “they demanded to know what my relationship was with him. I finally gave up (and) decided I would just rent,” said Tanya, who asked that her last name be withheld should she opt to “go back to that bank.”
Businessman Ben Wilkinson-Raemer and his wife tried for six months to purchase a (very small) apartment in Manhattan's West Village neighborhood, on the market for $400,000. He dutifully provided underwriters mounds of requested financial records. He winced when they also scoured the bank account of his 85-year-old grandmother because she gave him $10,000 toward the purchase. Despite his excellent 700 credit score, the loan was rejected.
“We opened a bottle of Champagne (afterward),” said Wilkinson-Raemer. “We were just so happy to have the whole weight off our shoulders.”
Even for successful buyers with sterling credit, seeking a mortgage these days can feel like a simultaneous root canal and colonoscopy. Tighter loan restrictions were expected after the mortgage fiasco. A quarterly Federal Reserve survey of loan officers at large banks confirms they have tightened standards significantly over the past three years, although now some lenders are beginning to loosen up.
But as the housing market continues to struggle, with sales of existing homes dropping unexpectedly last month, sales some mortgage brokers say the pendulum of scrutiny has swung too far, causing transactions to take far longer than necessary, putting buyers through too much hassle and blocking qualified applicants from purchasing.
The real estate business seems to have switched its motto from “location, location, location” to “documentation, documentation, documentation.” Potential buyers must chronicle every dollar of income and all assets via pay stubs, W-2s, tax returns, bank statements, credit reports and sometimes even letters from employers or family members. Mortgage brokers blame new federal lending rules for injecting unneeded delays in the loan process, and they accuse some underwriters of focusing on their own job security rather than fairly analyzing a consumer’s default risk.
“The big difference today is the fact that underwriters look at the guidelines with a strict black-and-white viewpoint and are unwilling to interpret the guidelines for fear of job loss,” said Kirk Jaffe, chief operating officer of Los Angeles-based Peak Financial Partners Inc., which offers real estate services. “It is always easier (for underwriters) to say no than to say yes.”
“The changing rules during the last couple of years are making it much more difficult to obtain mortgages, slowing our economy, causing our housing market to decline,” said Warren Greenlee, who runs RE/MAX at the Lake in Mooresville, N.C.
Many brokers and agents agree that home-loan snags are stalling the housing recovery and damaging the economy, hurting businesses that sell the types of goods and services and new homeowners typically buy.
“The changes are far-reaching," Greenlee said. "Some are comical.”
Like the lender who — due to an inspector’s typo — temporarily refused to fund a mortgage for a Greenlee client. When naming the property in his report, the inspector mistakenly inserted a space between the words “Four” and “Square.” The bank, JPMorgan Chase, insisted the inspector redo his report. “In years past,” Greenlee said, “the lender would have never noticed or cared.”
The simplest loans — those involving one person with one checking and savings account —require 33 pages of disclosure documents, said Todd Huettner, president of Denver-based Huettner Capital, a real estate mortgage brokerage.
Home-loan frustrations, Huettner said, are touching “every borrower.” But the most qualified applicants — high-income, high-credit folks who three years ago zoomed through the process with 10-minute pre-qualification calls and no-doc loans — now are most apt to choke on red tape because they have “the most complex finances,” he said. In such cases, an underwriter often demands extra documentation from the borrower “five, six, or seven” times.
“And considering that each iteration takes about a week, that’s why people are spending two and three months trying to get a loan done,” he said.
According to a survey conducted earlier this year by The Work Number — an employment verification database used by more than half of the Fortune 500 companies — 72 percent of respondents said they are confused by the flood of disclosure forms.
“We were joking while signing all the paperwork (for our mortgage) that, on paper, I don’t think anybody knows us better right now,” said Aaron Lupo. Last week, he and his wife closed on a $150,000 home in Olathe, Kan. The underwriters “know everything there is to know about us.”
But consumers like Wilkinson-Raemer in Manhattan, stuck in rental purgatory, are paying the steepest price.
In a “normal market,” about six of every 10 loan applicants are approved, estimated Paul McFadden, a loan officer at the Legacy Group in Bellevue, Wash. Before 2008, at the height of the subprime lending craze, roughly nine of every 10 loans were approved, he said.
“Now, it is probably three out of 10,” McFadden said. “As a lender, we've all had to adjust to a new reality.”
“In many cases, borrowers who have proven their ability to buy homes and pay for mortgages are being penalized and declined mortgages,” Jaffe said.
Huettner also blamed federal reforms for mucking up the mortgage machine.
RESPA — the Real Estate Settlement Procedures Act — requires lenders to supply good-faith estimates to would-be buyers, revealing loan terms and closing costs. As a result of the law, which went into effect Jan. 1, brokers cannot order property appraisals until their clients have had the good-faith estimates for three days — an “artificial delay,” according to Huettner.
Then there’s the federal Home Valuation Code of Conduct, which prohibits lenders, brokers and agents from selecting or having “substantive” communication with a residential appraiser. The idea was to ensure appraiser independence.
Before the mortgage crisis, fraudulent appraisals inflated many home values. Yet as a result of the new code of conduct, appraisers now might come from 20 to 50 miles away and are unfamiliar with the neighborhood’s nuances. As a result they often write “egregiously low” appraisals, Huettner and other brokers contend.
“The regulatory stuff coming from Washington ... it’s bad,” Huettner said. But he said the pendulum might not have swung as far as some believe.
Some of “the whining you’re hearing,” Huettner believes, lies with “inexperienced” mortgage brokers who “don’t have underwriting expertise.”
Huettner doesn’t see loan guidelines as being substantively different from years past. The real change: the paper trail of income evidence that’s now required.
He said the new scrutiny of borrowers is a change from recent years but not unprecedented.
"Go talk to someone who bought a home 40 years ago," he said. "They had to produce all kinds of documentation.”
“The end result here is that lenders and investors want to be certain that they have minimized any opportunity for default prior to originating a mortgage,” said Jim Sahnger, a mortgage brokers in Jupiter, Fla.
“As procedures were implemented to verify all aspects of the application, confidence has returned. And part of the result is the lowest mortgage rates we have ever seen,” Sahnger said. But “today, just because you have a FICO score in the 740-plus range does not mean you don’t have to prove it.”
1) NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.
2) Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.
3) AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.
4) HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo's investigation.
5) No Portability! Consumers are "trapped" with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.
Background:
I. Lack of PortabilityA. Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.B. Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.C. In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.
II. Lack of QualityA. AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal.i. Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.B. Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
III. Increased Cost of AppraisalsA. The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.B. $150.00 - minimum increase per appraisal$561.95 - average loan amount of $224,778 at .25% for extended lock period$711.95 - average total increase per transactionx 3,870,552* - 2007 HMDA report of residential real estate loans originated$2,755,639,496 - $2.8BILLION in increased fees to consumers!
IV. Articles Illustrating the Effects of the HVCCA. The Appraisal Bubble - The Center for Public IntegrityB. The Cure is Worse than the Disease - Appraisal PressC. Appraisals Roil Real Estate Deals - The Wall Street Journal
For more info on this see:
http://www.bainmortgage.com/MyBlog
http://www.youtube.com/user/ThinkBigWorkSmall#p/u/0/qxqXqi7WGzs
http://www.cnbc.com/id/30521887/Home_Valuation_Code_of_Conduct_Fix_or_Fraud
http://fredglickre.blogspot.com/2010/04/my-speech-at-hvcc-rally-today.htm
l
Mortgage brokers and Realtors are joining forces to persuade lawmakers who are currently reconciling the two versions of financial regulatory reform legislation into one bill to add language that would kill the Home Valuation Code of Conduct.
(6/22/2010)
Mortgage brokers and Realtors have united in a last-ditch effort to get the controversial Home Valuation Code of Conduct (HVCC) killed off as part of the larger financial regulatory reform legislation that is currently being debated by lawmakers in Congress.
In this article:
A joint House-Senate committee chaired by Rep. Barney Frank, D-Mass., was tasked with reconciling the two versions of the legislation, SB 3217 and HR 4173. The House version called for the termination of the HVCC and contained provisions that would overhaul the regulatory process for appraisals, including requiring the registration of appraisal management companies (AMCs) and giving more funding for federal and state appraiser regulators accountable for oversight and enforcement of existing appraisal rules.
SB 3217, however, contained no such provisions. It is hoped that the final reconciled version of the two bills, due on PresidentObama’s desk by the July 4 holiday, will contain the original appraisal provisions.
Reports indicated that mortgage provisions would be debated on June 22 and that Realtors and mortgage brokers are especially interested in seeing the HVCC killed off.Realtors and mortgage brokers have argued against the code ever since its introduction in May 2009, saying it has led to lower quality appraisals and the use of inexperienced and unqualified appraisers. National Association of Mortgage Brokers CEO Roy DeLoach told the newspaper that the HVCC is causing more harm than good. “It’s basically hollowing out the equity in communities whether you intend to sell or not,” he said.
Independent appraisers have also been opposed to the code, which resulted in the significant uptake in use of AMCs and what they see as massive downward pressure on appraisal fees as companies seek to compete with low price points.
However, mortgage lenders, many of which fully own or have significant stakes in AMCs, oppose the effort to alter the rules. John Courson, the Mortgage Bankers Association’s president and chief executive officer, is quoted as saying “We’re going to try all we can to keep it out.”
Most groups on both sides of the debate are in favor of retaining some kind of appraiser independence, including possibly retaining the ‘blind’ ordering of appraisals.
Valuation Review
Jun 21, 2010
By Jessica Holzer, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- U.S. House negotiators on the sprawling financial- overhaul bill will seek to reinsert a measure to phase out a controversial new set of standards for home appraisals.
The Home Valuation Code of Conduct, adopted in May 2009 to ensure appraisers' independence, bars mortgage brokers and bank-loan officers from selecting appraisers.
Mortgage brokers and Realtors complain the rules have produced low-ball appraisals that have blown up deals, while appraisers say the change has hurt appraisal quality.
Mortgage lenders, however, are fighting to keep the new rules. Several major lenders own or have a stake in companies that have seen a surge in business as a result of the rules.
The House measure would sunset the code and require federal regulators to come up with a new set of protocols. It was not contained in the financial-overhaul bill that passed the Senate.
The code of conduct was adopted by the industry last May as a result of an agreement between the New York Attorney General and Fannie Mae (FNM) and Freddie Mac (FRE).
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201006211347dowjonesdjonline000269&title=us-house-to-push-to-sunset-home-appraisal-code
Want a lender to delay or even cancel your mortgage closing? Then change your "borrower circumstances" between the day you apply for and the day you close a home loan.
Lenders have gotten stricter in response to the mortgage meltdown. The latest tightening of the screws comes from Fannie Mae. The mortgage titan's Loan Quality Initiative, which went into effect June 1, requires lenders to track "changes in borrower circumstances" between application and closing.
The rules aren't new, but Fannie will enforce them more vigorously. For borrowers, it means certain actions are likely to delay or otherwise mess up a mortgage closing.
"Any change in circumstance could affect and delay a borrower's closing on a transaction," says David Adamo, CEO of Luxury Mortgage of Stamford, Conn.
Following are three things borrowers can do to mess up their next mortgage closing.
Get a new credit card or auto loan
If you want to implode your impending mortgage, get a new credit card or auto loan.
Lenders have long admonished mortgage applicants to avoid getting new credit cards and auto loans while home loans are in underwriting. Fannie's Loan Quality Initiative adds urgency to this request.
For example, picture a borrower who gets a car loan a week before closing on the mortgage. The mortgage lender doesn't know about it. Later, the borrower misses a couple of mortgage payments.
Fannie Mae can look back, discover the undisclosed auto loan and make the lender buy back the bad mortgage. That's a money loser for the lender.
So at the eleventh hour, most lenders check credit for new accounts.
Even merely opening an account — without charging anything to it — can be a mistake.
Retailers often offer discounts to customers who apply for store credit, Adamo says. "That is something that most consumers will take advantage of, and even something as benign as that could affect a borrower's ability to close on a mortgage approval."
Charge up credit cards
Charging up credit cards with thousands of dollars' worth of appliances, tools and yard equipment is another surefire way to muck up a closing. It's best to leave those cards alone.
"Don't increase your credit card balances at all. Consider paying cash for everything," says Dan Green, a mortgage planner for Waterstone Mortgage in Cincinnati.
Mortgage approval is based partly on debt-to-income ratio. The lender looks at the borrower's minimum monthly debt payments and compares them to income. If the ratio of debt payments to income is too high, the borrower could be turned down for a mortgage.
Fannie encourages mortgage lenders to recalculate debt-to-income ratios just before closing. If a spending spree sends the debt-to-income ratio too high, the mortgage could be doomed. For this reason, borrowers should wait until after closing the mortgage before buying furniture, a refrigerator or a lawn mower on credit.
Change jobs
Changing jobs is another good way to derail a mortgage before closing. Other potential deal-breakers include staying with a current employer, but switching from a salaried position to one where primary income comes from commissions or bonuses.
"Because the rules about any job change, especially if you go to commission or bonus, usually you need a two-year history," says Bob Walters, chief economist for Quicken Loans. "So if all of a sudden you switch from W-2 to some other kind of compensation, and you don't have the history, a lot of times that income can't be included. So all of a sudden you'll find maybe you don't qualify."
Keep in mind the actual lender will pull their own credit report at closing, and if your credit scores have dropped, you may no longer qualify for the rate that was underwritten and the final approval may come back with a higher rate. Unfortunately, all lenders qualify you by your credit score as to which criteria you fit and every loan has different criteria attached. The loan to value, the debt to ratio and so on etc. This is what borrowers do not understand, and they think the loan officer is baiting and switching. They are not. If an issue comes up that the lender decides you do not qualify for a certain loan, the only thing a loan officer can do is shop for lenders and see if any are willing to give the rate and program they thought you qualified for. If you have good credit and know your score, the loan officer can give you an idea what he or she can offer based on what you say. But do not expect them to stand by their quote if and when they pull your credit your scores have dropped.
Whether you are thinking of refinancing, buying a home or investing in real estate, today's guidelines are more strict than they have even been. The process of applying for a home loan is more documented than ever before no matter if you think you never had a problem before. Good credit is critical when it comes to obtaining the best interest rates and terms on a mortgage.
Methods to Improve Your Credit
1. Don't Apply For New Credit. Every time that you have your credit pulled by a potential creditor or lender, you can lose
points from your credit score immediately.
2. Don't Pay Off Collections or "Charge Offs." If you want to pay off old accounts, do it through escrow, making sure that
the debt is yours. Request a "letter of deletion" from the creditor.
3. Don't Close Credit Card Accounts. If you close a credit card account, it may appear that your debt ratio has gone up.
Closing a card will affect other factors in the score, including credit history.
4. Don't Max Out or Over Charge Credit Card Accounts. Try to keep your credit card balances below 30 percent of their
limit during the loan process. If you pay down balances, do it across the board.
5. Don't Consolidate Your Debt. When you consolidate all of your debt onto one or two credit cards, it will appear that
you are "maxed out" on that card and you will be penalized.
6. Don't Do Anything That Will Cause A Red Flag To Be Raised By The Scoring System. This includes adding new accounts,
co-signing on a loan or changing your name or address with the bureaus.
7. Do Join a Credit Watch Program. Then, you may check your own credit reports regularly (you won't get dinged for a
"hard" inquiry). Plus, if something unexpected does show up, you can address it promptly.
8. Do Stay Current On Existing Accounts. Like your mortgage and car payments, one 30-day late notice can cost you.
9. Do Continue To Use Your Credit As Normal. Red Flags are raised easily with the scoring system. If it appears that you
are changing your pattern, it will raise a red flag and your score could go down.
10. Do Call Your Loan Officer. Your Loan Officer may be able to supply you with the resources you need to stop any
derogatory reporting to the bureaus. Ask for details.
If you or anyone you know has any questions about this or any financial questions, please don't hesitate to give me a call.
Sincerely,
CHICAGO/KANSAS CITY (Reuters) - Two top Federal Reserve officials on Tuesday offered opposing signals on the direction of interest rates, highlighting an increasingly salient split within the central bank.
Chicago Fed President Charles Evans argued high unemployment and low inflation justified holding benchmark interest rates at very low levels.
"I think we will continue to have an accommodative policy stance for quite some time," Evans told business leaders in Chicago.
But in a forum in Kansas City, colleague Thomas Hoenig reiterated his call for the U.S. central bank to begin raising rates soon, bringing them to one percent by end of summer from their current rock-bottom range of zero-0.25 percent.
Hoenig represents a vocal minority at the Fed that most analysts do not expect will dissuade its Washington-based board from maintaining the accommodation members believe is needed to sustain a recovery.
Still, the divergence does send mixed signals to financial markets, which are already vulnerable because of ongoing anxiety about Europe's debt problems.
The nervousness and its impact on interbank lending has captured the Fed's attention, with some officials saying it strengthens the case for keeping borrowing costs low.
Evans downplayed the impact of any slowdown in European growth on the United States, saying that the trade effects "are likely to be limited" because Europe accounts for just 15 percent of U.S. exports.
"Nonetheless, if events in Europe evolve so that they have a more severe and broad impact on financial markets, then the scope of the problems for the U.S. could be magnified," he said.
While direct U.S. exposure to European debt is limited, he said, further liquidity or solvency problems in Europe could lead to a pullback by investors and lenders and throttle lending.
The Fed last month opened dollar lending lines to the European Central Bank and other major central banks to head off potential stress in the international banking system from the crisis, but so far they have not been heavily tapped.
Fed Chairman Ben Bernanke said on Monday the U.S. economy appears to have enough momentum to avoid a "double-dip" recession, citing strengthening consumer and business spending.
"There are some signs the private sector is picking up the baton," he said.
In response to the worst financial crisis in generations, the Fed slashed interest rates effectively to zero and undertook a wide range of emergency lending measures to restart frozen credit markets. The Fed has kept short-term borrowing costs near zero since December 2008.
Hoenig said he is leery of this prolonged period of the same easy money that got the economy into trouble in the first place by creating bubbles.
"I'm worried about it," he told the Kansas City Fed forum. "I am very much of the mind that we need to have a stable monetary policy that looks to the long run."
Hoenig said the nation's manufacturing sector, which has bounced back strongly from a steep retrenchment at the end of 2008 and early 2009, will continue to build on this strength.
Housing appears to have stabilized, but commercial real estate will stay weak for some time, he said, adding that he sees U.S. gross domestic product expanding between 3 percent and 3.5 percent.
(Additional reporting/writing by Mark Felsenthal, Ann Saphir, Kristina Cooke, Pedro da Costa; editing by Carol Bishopric)
How to qualify for the best mortgage rates you hear advertised.
Shelby Bateson - Mortgage and Housing Examiner
Whether you are buying a house, an investment property, or refinancing a current mortgage, there is a long list of variables that determine what rates you will pay. In addition to considering rates, there are still many types of loans available, each with their own eligibility criteria, that can affect your rates, including:
Conforming/Conventional: Conforming loans are those that follow Fannie Mae/Freddie Mac lending guidelines, because approximately 87% of all conforming mortgages are still sold to Fannie or Freddie. Typically conventional loans have a maximum loan amount of 417,000, regardless of where you live in the country.
Jumbo: Jumbo loans are those with loan amounts/balances above $417,000High balance conforming: for 2009, the loan amounts that are considered “conforming” have been increased, pursuant to the American Recovery and Reinvestment Act. In areas where the average home prices are higher than Fannie/Freddie conforming limits, “High balance conforming” loans are now eligible for special rates, substantially lower than Jumbo loan rates, but a bit higher than conforming loan rates. Click here to determine the maximum loan amounts in your area to qualify for High balance conforming loans.
Government (FHA, VA, and USDA rural): These are loans that are insured by government entities, such as HUD, VA, and USDA.
ARM (adjustable rate mortgages): These are loans that start at lower rates than conforming, and your rate is locked for a specified period of time before the rate can adjust higher or lower (depending on the index your loan is tied to, and the margin, which never changes.
A few lenders are offering other loan types, but for the sake of this article, we will consider only the above.
Regardless of the type of financing you are seeking, there are other criteria that CAN affect the rate you will pay on your loan, including:
Credit score: When you apply for a mortgage, almost all lenders will require what is called a “Tri-merge” credit report which pulls your credit history from all three of the major credit bureaus. Most lenders will use the “mid score” to determine your rate eligibility (because all three credit bureaus have different formulas for determining your score, so expect each score to be different, and because not all creditors report to all three bureaus.)
Your credit score is the number one factor in determining the rate and types of financing available to you, so your credit history is critical. Currently most lenders require scores of 740 or better to qualify for the best advertised rates, but this is very dependent on the type of financing you want. For example, VA FHA loans are not nearly as rate sensitive as Fannie/Freddie loans.
Credit history: Lenders are looking for a number of factors on your credit history, including, but not necessarily limited to:
LTV (loan to value ratio): how much down payment can you make, compared to your purchase price? For a refinance transaction, how much is your house worth compared to the loan you are requesting? The lower the LTV - to a point - the better the rate will be.
Debt ratio - how much do you owe other creditors relative to your monthly income? Lenders look at two debt ratios, the ratio of the new mortgage payment (including taxes, insurance, HOA payments, and any other recurring debts associated with your mortgage payment) to your gross monthly income, AND the ratio of all your debts, including the new mortgage payment, relative to your gross monthly income.Different loan programs have different debt ratio limits, but in general, most programs are looking for ratios close to 38/45 (38 is your mortgage payment to income, 45 is the ratio of all debt to income.)
Type of property: a house, condo, condotel, manufactured house, land, etc. If you are buying a manufactured home, for instance, you should expect to pay higher rates, and because not all lenders are doing manufactured home loans, your choices will be more limited. Looking for financing on a condhotel? You may be limited to financing by the builder, the development, or private money.
Occupancy: Will you live in this house, is it a second home or an investment? How many other investment properties do you own? How long is your history as a landlord?
Lock period: How long do we need to lock this loan? Can the loan close in 30 days or less? Often, this depends on you getting all the required paperwork to your lender quickly. But some of this is out of your control. Before a loan can close, an appraisal is required. This can take up to 3 weeks from the date it is ordered until it is received. Also, as this market has become so volatile, some lenders are offering rate incentives for very short locks of 7 -12 days, so many people are opting to wait to lock the loan until after final lender approval has been received.
Employment history: Most lenders want to see at least 2 years at the same job, or at least in the same line of work.
Type of Loan: Refinance or Purchase: If you are refinancing your house, is this to get a better rate and term, or do you need cash out? Cash out loans usually have an upward adjustment to rate, especially if the Loan to Value is higher than 70%.
Location: Rates differ from state to state AND can also be affected by being in an area designated as "declining value?" Most areas of the country are still as "declining value." This primarily affects how much you can borrow, relative to the value (LTV), but could also affect the rate.
Loan Amount: Believe it or not, most lenders charge a higher rate for loan amounts under $100,000.
And if all the above information isn’t enough, if you are shopping for a mortgage, it is also important to work with someone with offices close to the property you want to finance. A lender in Arkansas, for example, may not have Oregon rates available, and may not know about any special loan programs or financing specials running in your area of interest. Mortgage brokers work with big banks, but also work with smaller, less well known, and sometimes local lenders. Because these smaller lenders do not advertise, they can sometimes offer lower rates.
Mortgage rates are very volatile right now. Some lenders adjust rates several times a day based on the most current market rates. Other lenders might change rates only once a week. So, it is very important to shop for mortgage rates before you settle on a lender.
Questions and comments are always welcome.
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Dana Bain
Premiere Mortgage Services Inc.
978-422-2311
If you've been following the news the last few years, you should be very familiar with YSP (yield spread premium) - fees paid to mortgage brokers for obtaining financing for you. YSP is the difference between the "par" rate (wholesale rate) quoted to mortgage brokers, and the rate you ultimately pay for your mortgage. YSP has always been regulated, contrary to popular myth that has been circulated via bank lobbyists. Yes, mortgage brokers can make some decent money getting a loan for a borrower, but not even close to the commissions that real estate agents charge - and not even close to the SRP (Servicing released premiums) that banks make on every loan they fund.
If a mortgage broker is quoted a par rate of 4.75% for instance, and you are quoted 4.875%, the YSP is could be somewhere around .25% to .5% of the loan amount. That equates to between $250 to $500 on each $100,000 of the loan amount. But remember that the bank quoting the rate of 4.75% already has a mark up on that rate, because of course, the lender wants to make money on the deal. What is the actual par rate to the lender (bank)? And what rate will this bank make on the sale of the loan to an investor? Banks also pile on charges for "risk based pricing." So, if you are not the "ideal" home buyer, there can be a "hit" to the rate for credit score, loan to value ratio, loan amount, type of property, and much more. These "hits" to the rate are assessed against the mortgage broker, so of course the rate you will be quoted goes up. AND, of course, the bank is making money (SRP) on every single "hit" as well.
So, what is SRP? SRP is the premium that banks make (and pass a portion onto their loan officers) when they sell a loan to the secondary market. Everyone should now be familiar with the concept of their loan being sold. Prime loans have long been sold to Fannie Mae, Freddie Mac, big banks, hedge funds, and other investors, both American and foreign. SRP is earned by charging fees, charging - familiar with this? higher rates - just like mortgage brokers charge. In fact, banks make a LOT of money on SRP, are not capped on the amount of SRP they can earn, and unlike mortgage brokers are not required to disclose the amount of SRP they are earning or are paying their loan officers. Of course, they have every incentive under the sun to make as much money as possible, so those of you who go to banks, thinking you are saving money or getting better rates - think again - it is very likely that you are NOT!
In fact, the truth is that mortgage brokers are far more regulated than banks when it comes to making home loans. Mortgage brokers must be educated in the loan process. They must be licensed, and must take continuing education on everything from loan financing to ethics. Bank loan officers do not have to be licensed, and in general are far less informed than independents. They are encouraged to sell you on "advantages" such as buying down a loan rate, when in fact, in most cases, the bank wins on rate buy downs. There are some buy down programs where the borrower will NEVER break even! (The cost of the buy down is more than you will save, even if you keep the loan until it is paid off.)
Banks are permitted to charge up front application fees for your mortgage, thereby locking you into a loan with them. Mortgage brokers are prohibited from charging application fees - and are allowed to charge only for two upfront fees, the cost of the credit report and the cost of the appraisals. Do you know anyone who has "eaten" an application fee, even when they were able to find a better loan rate elsewhere? It happens all the time.
To make the playing field even more rocky - banks of course, have far more money than the mom and pop mortgage broker and they spend that money freely on lobbyists. The lobbyists work on our Congressional representatives to pass more laws to "protect" the consumer - but in fact, in most cases, the laws are protecting the very banks that are paying their executives multi-million dollar salaries, and whose greed and corruption created the financial meltdown we are all living through today.
Next time you are ready to get a mortgage loan - why not ask the loan officer at the bank how much SRP they will be making on your loan? Or how much SRP the bank will be earning on your loan. Do you think those numbers will be disclosed to you?
Of course banks have been trying for years to shut down the independent mortgage broker. The competition is not welcome. Sadly, they are succeeding. Independent mortgage brokers are disappearing at an alarming rate across the country. Those that are still in business are very often actually "net branches" of a small or regional bank - that of course, is taking their SRP off the top of every loan that closes. And so it goes - bureaucracy at its finest.
The latest news is that Congress is getting ready to again drop the cap on the amount of YSP that mortgage brokers can earn on a loan. The proposed cap is 3%, which sounds very high, but remember that this number has to include ALL the fees that lenders charge and all the garbage fees you will pay for the loan that the mortgage broker will never touch. These fees include things like appraisals, underwriting fees, processing fees, credit reports, and on and on. Remember - banks have no such cap. But, to make matters even worse for the consumer, think about the small loan amounts and that fee cap.
If a consumer is applying for a $50,000 loan for example, 3% is only $1500. When you subtract all the fees out of that $1500, (such as $500 for an appraisal, $600 lender fee, $400 processing fee, etc, the mortgage broker could end up paying to get you a loan. How many mortgage brokers will be helping those of you who need small loans? Just another strike at competition financed by the banks, via their lobbyists.
This column is not intended to to portrayl mortgage brokers as victims at the mercy of banks. It is more to open your eyes as consumers to what is taking place out there behind the scenes, and how this will affect your ability to get financing, and what you will pay for those loans. It is a time for full disclosure - and SRP should be disclosed too.
For more information - please check out more information about SRP.
Massachusetts License Number MB1205 Licensed by the State of New Hampshire Banking Department- License Number 5430-MBR Premiere Mortgage Services Inc. NMLS #1498 is a licensed broker and not a lender. We "Arrange Loans" but we do not make loans. Dana Bain NMLS #18693 Robin Dunbar Bain NMLS #18699 Privacy Policy
Massachusetts License Number MB1205
Licensed by the State of New Hampshire Banking Department- License Number 5430-MBR
Premiere Mortgage Services Inc. NMLS #1498 is a licensed broker and not a lender.
We "Arrange Loans" but we do not make loans.
Dana Bain NMLS #18693
Robin Dunbar Bain NMLS #18699
Privacy Policy
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