Living In Tucson Blog

FHA has some good news and bad news for borrowers. The good news is lower UFMIP – Up Front Mortgage Insurance Premium. The new rate is 1% down from 2.25%. The bad news is the MIP – mortgage insurance premiums are now .9% (per year) up from .55% for loans of 95% to 96.5% of the sales price. The MIP is .85% for loans with a down payment greater than 5%. This change represents about $30 more per month for a $150,000 loan amount. The hits just keep on coming!

Call David Wolsky at 520-275-2536 to help you through the mortgage maze!

I got a call the other day from a potential client interested in refinancing his home. He was trying to modify his loan and the lender suggested that he stopped making payments because the banks will not even talk to you about modifying a loan that is getting paid on a timely basis. Of course, their credit is shot now and they cannot qualify for a refinance despite the record low interest rates. I get calls like these every week. Why can’t everyone refinance their homes with record low interest rates?

1. Many homeowners have lost all of their equity or are underwater (owing more than the current value of their homes). Nationally, about 25% of homeowners fall into this category. In Tucson, over 30% of homeowners are underwater and in Phoenix, sources estimate over 50% fall into this category.

2. I am finding that some potential clients will pay for an appraisal, only to find out the appraiser has given the property a low value. Although there might be equity, it may not be enough to refinance.

3. Underwriting guidelines are very stringent. Many borrowers obtained their home loans with alternative document loans such as stated income loans, no document mortgages or no ratio mortgages. These products do not exist in the current mortgage marketplace. As a result, these same borrowers cannot refinance their loans because they cannot verify their income or assets.

4. Your credit is shot! About 25% of Americans have badly damaged credit. They have walked away from home loans and credit card debt. Bankruptcies are on the rise. Thousands of homes are foreclosed every day!!!

5. Another road block to refinancing is home equity lines in second position behind your current first mortgage. The combined loan-to-value ratio (CLTV) is very high in many cases. Lending guidelines cap CLTV especially in declining markets such as Arizona. Even if you have sufficient equity in your home, the second mortgage lenders are inundated with requests to subordinate their equity lines behind new first mortgages.

Despite these challenges, many borrowers are able to refinance their homes because they have the right combination of Good to excellent credit, income and asset qualifications and equity in their homes. Others may qualify for a program to help folks without enough equity if their home loans are owned by Fannie Mae or Freddie Mac.

If you are endeavoring to refinance, please be patient during the process as the system is at its capacity. I have heard that the three biggest banks in the country are taking over 90 days to process refinances. The residential mortgage industry has significantly consolidated over the past three and a half years as the economy was melting down. Of the top 25 lenders in 2008, only eight still exist! Also, lenders prioritize purchase transactions, so a refinance may have to go on the back burner. The best scenario for refinancing is to have your income and asset documentation available at the time of application. You will be required to submit your  two most recent income tax returns with all schedules, your two most recent W2s, if applicable and your two most recent bank and investment statements. If you own more than one home, be prepared to provide the complete housing expense documentation of house payments, taxes, insurance and home owners association fees, if any. Appraisals can take a week or two to complete. They are ordered through the lender’s appraisal management service. Be truthful on your application and hang in there! Be extra patient if you have a second mortgage or equity line and you want to keep it subordinated to your new first mortgage because you will add several weeks onto the transaction. Work with professionals! I’m David Wolsky, fully licensed in Arizona with over sixteen years of experience. I can be reached at david@davidwolsky.com or by calling 520-275-2536.

Wow, the weeks have blown by since my last post. Lots of things have been happening in our industry and for me personally.  My family and  I spent the first half of July in South America and had an amazing time. We were there on a personal trip to visit our son Adam who has been living in Uruguay since January. We spent time in Buenos Aires, Iguazu Falls (Click here to check out my youtube video!) and Montevideo. It was a great trip and we had the opportunity to meet several cousins from my father’s side of the family for the first time! My Great Uncle Isidor had immigrated to Argentina in the early part of the 20th century and we spent time with his daughter and grandchildren. (Uncle Isidor pased away in 1981.)

Back in Tucson, my mortgage license was approved. All originators (except for the originators in those big banks like Wells Fargo, Chase and Bank of America) needed to be fully licensed in Arizona on July 1st to continue taking loan applications. National licensing is also required for originators including a background check. Several thousand loan originators have left the business because of the licensing requirement and thousands have been forced to the sidelines while going through the licensing process.

FHA announced some good news and some bad news. The upfront mortgage insurance premium has been reduced from 2.25% to 1%! The bad news it the monthly premium has rise to .9% from .55% for most transactions. Please get off the fence if you are thinking about purchasing a home with a FHA loan! You will save about $40 per month for a $200,000 loan. The implementation date is scheduled to be September 7th, but I have heard that it may get postponed until October 4th.

In other mortgage news, interest rates have been continuing to drop to record low levels in Freddie Mac’s weekly surveys. Freddie Mac has been reporting the weekly average of mortgage rates for over forty years. The phones have been busy with refinance and purchase applications. Unfortunately, not every applicant will qualify these days. The most common reasons for denials include credit issues, lack of down payments or lack of  equity for refinances, inability to verify income or assets and insufficient work history. Don’t despair! We are getting our qualified borrowers approved! I welcome your inquires and referrals.

For further information, contact David Wolsky at david@davidwolsky.com or call 520-275-2536. I have over 16 years of experience!

It’s been several weeks since my last posting. I’m not sure if I have many followers to this blog, if so, I apologize for the lack of new posts. I’ve been fairly busy lately with potential buyers this past spring trying to take advantage of the home buyer’s tax credit that expired on April 30th. I have also been busy taking my twenty hours of S.A.F.E. classes for licensing and four hours of Arizona mortgage law classes. I take the tests next week! Wish me luck. Nationally, Loan originators have to be licensed by July 1st, 2010. I personally think this is a good thing and I expect that many originators will leave the business.

In addition to licensing, there are lots of other things happening in our industry, so let me attempt to boil some of it down.  New Fannie Mae/Freddie Mac regulations will start in June. We will be required to pull a new credit report right before closing to see if the borrowers have increased their debt load which would impact the debt-to-income  ratio. The new quality control measure is also designed to prevent “shotgunning” which is a type of mortgage fraud involving simultaneously applying for multiple mortgages on the same property and then fleeing with the proceeds. Another new guideline is a change in qualifying for an ARM. Borrowers are required to qualify for the higher payment of the note rate plus 2% or the fully indexed rate. A fully indexed rate for an ARM is the highest amount the rate could ever be when adding the index (the adjustable component to calculate the rate) and the margin (which remains the same throughout the life of the loan). For example, a five year ARM can adjust to 5% over the start rate (note rate) which is to say that a ARM that starts at 3.75% can adjust up to 8.75%. The maximum rate is the rate that an underwriter must use to approve a borrower.

Why are these guidelines getting tighter? That is because Fannie Mae and Freddie Mac are requiring lenders to buy back record numbers of loans. Once a lender sells loans to investors such as Fannie and Freddie, they don’t ever want to have to buy them back.

We did hear some good news last week about loosening loan guidelines. We are now offering 95% conventional financing for buyers of one or two unit primary residences in Arizona, a declining market!

As always, if you have any mortgage questions or needs, I am available to take your call! Contact David Wolsky at 520-275-2536 or email me at david@davidwolsky.com.

The Fed ended their program of buying MBS (Mortgage Backed Securities – Fannie Mae Bonds) and it is already affecting the market. We have already seen upward pressure on interest rates. Additionally, we are seeing an overall improvement in jobs and housing. The S & P/Case-Schiller Home Price Index has been rising for eight consecutive months and Pending Home Sales rose by 8.2%!

The $8000 tax credit for first time buyers has been a decent stimulus, but the $6500 credit for homeowners buying a new primary residence has fallen short of expectations.

Here are articles of interest regarding bonds and real estate:

Real Estate Outlook: Positive Track

Bonds in the “danger zone”

Contact me, David Wolsky,  if you have any mortgage related questions. I can be reached at 520-529-7515 or email david@davidwolsky.com. Your comments are welcome.

I took the opportunity to record this video blog outdoors this afternoon so please pardon the wind noise. It was another sunny day in Tucson! The message is “Time is running out!”. The home buying conditions are perfect and the affordability index is at levels not seen in decades. Remember:

1. Rates will not stay lower indefinetly

2. The homebuyer’s tax credits will run out in 5 weeks!

3. Home prices will go up eventually

If you are in the market for a new house this spring, check out www.homepath.com. Home Path are Fannie Mae REO properties all over the country. The deal just got better. Fannie Mae is offering a 3.5% incentive for buyers who purchase and close on a Fannie Mae owned home between January 28 and April 30, 2010. The credit can be used towards closing costs, the purchase of new Whirlpool appliances by Fannie Mae or a mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%. Combine that with a $8000 tax credit for first time buyers or a $6500 for qualifying repeat buyers who have owned a home for five out of the last eight years.

There is also special financing available for Fannie Mae owned homes. The benefits include:

• Low down payments (3% for owner occupied and 10% for investment properties)
• Qualify with less than perfect credit
• Down payment (at least 3%) can be funded by your own saving, a gift or a qualified grant
• No mortgage insurance
• No appraisal fees

PHH Home Loans and Coldwell Banker Home Loans is an authorized Fannie Mae HomePath lender. Call David Wolsky at 520-275-2536 for more details! You can apply online on my website: http://davidwolsky.coldwellbankerhomeloans.com/

Check out this video:

There are only 14 weeks to get your new home into escrow for the homebuyer’s tax credit. Act now!! If you are a first time buyer, you can qualify for a tax credit up to $8,000. If you are a homeowner for the past five years, you might qualify for a $6,500 tax credit if you purchase a new primary residence. In either case, you must have your purchase contract dated by April 30th, 2010 and close of escrow must take place by June 30th, 2010. Members of the armed forces and federal diplomatic and intelligence personnel stationed overseas get and extra year to claim their credit.

Contact me, David Wolsky for more details… the direct line is 520-529-7515 or email me at david@davidwolsky.com.

The Senate has voted last night (11/4) to extend and expand a popular tax credit for homebuyers that was scheduled to expire Nov. 30. The House is expected to schedule a quick vote on the bill as early as today 11/5 as part of a package that also extends unemployment benefits for people out of work more than a year. The White House indicated that the President will sign the legislation.

How the homebuyer tax credit would work:

• Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers who purchase between December 1, 2009 and May 1, 2010. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.
• Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.
• Military deadline: The deadline is extended by a year for members of the military who have served outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010.
• Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.
• How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
• New anti-fraud limitations imposed.
• Cost: $10.8 billion.

 Source: Bloomberg Press and Associated Press and confirmed information with the content of the Senate bill.

Call David Wolsky of PHH Home loans for further details. I can be reached at 520-275-2536.

I have joined Coldwell Banker Home Loans as a Mortgage Advisor last week! We are also known as PHH Home Loans. After completing a week of training at our Mt. Laurel, New Jersey headquarters, I was incredibly impressed by the depth of my training. It was great meeting the people who will be integral to my team, committed to always giving my clients the ultimate value in a timely fashion. Our mission statement is to treat customers like family.

Who are we?? Well, we are the fourth largest mortgage lender in the country! We are publicly traded under the ticker symbol of PHH. We are the largest “private label” mortgage company in the United States. We are the mortgage affiliate for Coldwell Banker, ERA and Century 21 real estate companies as well as the mortgage company for Merrill Lynch and Charles Schwab brokerage houses. Coldwell Banker Home Loans (PHH Home Loans) is a very stable company, thanks to a conservative and sensible approach to mortgage financing. For example, we did not offer sub-prime loans or option ARMs which helped to fuel the current financial woes. We are the only Top Ten mortgage company that is not associated with a traditional bank. I am excited about this opportunity to work with Coldwell Banker as well as the added value I can offer to my loyal clients who have worked with me and referred business to me over this past 15 years of my career as a mortgage consultant.

You can reach me, David Wolsky by calling 520.977.3300 or emailing david@davidwolsky.com. We are licensed in all 50 states.