Writing Example: Industry Newsletter for January 2013

Power of Attorney Approval Requirements

Effective: 1/17/2013

Access Real Estate Lending requires that our borrower sign their closing documents whenever possible but acknowledge that there are times that one or both borrowers may be unable to do so. In these limited cases, Access will allow an individual with Power of Attorney (POA) to sign for one or both of the borrowers.

General POA Requirements

Access Real Estate Lending has the following general requirements to use a POA. There may be additional POA requirements based on the reason for the Power of Attorney. Please Note: POA’s must be approved prior to docs, and include loan number and letter of explanation as to why POA is needed.

• The POA must be a Specific Limited POA that meets current state law
• A General POA is Not Allowed
• The POA must have the property address, not just the legal description
• The POA must have an expiration date later then the anticipated date of signing
• The POA cannot be an interest party to the transaction, such as a real estate agent, seller, builder, loan officer, processor, ect
• The POA can only be used on the closing documents. The borrowers must all sign the loan application and the upfront disclosures

Save Time!

Access has a New Mortgage Insurance Program* Effective: 1/3/13

Getting Pre-Approved for a home loan saves time and eases the process. Now when you chose Access to get a mortgage loan, you may also get pre-approved and underwritten by mortgage insurance and our bank before you even find a home, saving loads of time!

*Must meet certain criteria

Access Real Estate Lending also has a secure online application to get Pre-Approved for a home loan on our website at www.accessloans.net/get-a-loan-apply-now

FHA’s Four “Immediate Actions”

Standards for mortgage qualification are on the move. The Federal Housing Administration (FHA) has outlined actions to revamp their reserves and shrink their share of the mortgage market. These actions include raising minimum credit score requirements, raising down payment requirements on jumbo-sized loans, and restricting access to SHA mortgages after a foreclosure. These changes may hinder and interfere with buyers’ ability to get an FHA loan in the future.

Background:

FHA is self-funded and FHA loan default claims and mortgage insurance premiums are paid through their Mutual Mortgage Insurance fund. The FHA must keep $2 in the MMI fund for every $100 insured. When loans began defaulting at historically-low rates, the surplus of FHA became harder to maintain. 2006-2009 hit the FHA hard. As the reserve ratios fell, foreclosures began and by 2011 FHA’s fund was down to $0.24 for every $100 insured.  Their most recent audit of FHA found their reserve fund in the negatives.  This is why there are “immediate actions” in play by the FHA, even though they can be seen as unfavorable for those looking to buy as well as refinance (through FHA Streamline Refinance). The FHA has raised their mortgage insurance premiums 5 times in the past 5 years in hopes to reduce future foreclosures. This has created hurdles on obtaining a FHA loan which are only going to get higher. FHA rates still remain at extreme lows though so if you are a first time buyer or already own a FHA mortgage, call us to see if you are eligible for a FHA Loan or if a FHA Streamline Refinance will save you money.

The 4 Actions:

1. Minimum Credit Score for New FHA Loans

FHA will have a minimum credit requirement of 620 for borrowers whose debt-to-income (DTI) exceeds 43% in the effort to decrease the number of claims by 20+ percent. Those with credit scores under 620 will still be eligible for FHA, but lenders will have to show evidence of “compensating factors” (i.e. large down payment or equity position, or higher levels of reserves).

2. Higher Jumbo FHA Loan Costs, Down Payment Standards

FHA is the only agency that can insure single-family homes for more than $625,500 but will now “redirect this business to the private market” by raising its down payment requirements to a 5% minimum. Non-jumbo FHA loans have a minimum down payment of 3.5% and MIP at a low of 1.20%

3. Moratorium on Full Draw HECM Reverse Mortgage Program

The Home Equity Conversion Mortgage, which is through FHA, is the only reverse mortgage insured by the Federal government. This program has created loss for the FHA though. To “protect FHA’s single-family insurance programs” and “encourage the return of private capital to the housing market” FHA will discontinue the Standard Fixed Rate HECM and new HECM loans will be moved to the Saver Product, which will have fixed or variable rates, lower loan fees like borrower’s upfront closing costs, and lower equity withdrawals. If rules are established in a timely manner, the change will apply to case numbers assigned prior to April 1^st for loans closed on or before July 1, 2013. The FHA is going to also create formal “set-aside” guidelines for real estate taxes and insurance for reverse mortgage borrowers.

4. Access to An FHA Mortgage After a Foreclosure

Buyers with a foreclosure are able to access FHA-insured finances after three years of the foreclosing. This policy will now be changed to restrict this access to only borrowers who have re-established credit and can provide a fully-documented loan application. FHA plans on examining the cause of the foreclosure to determine whether a foreclosure for a borrower seems like a one-time event such as loss of employment. The 3-year waiting period will stay in place.

What’s Happening in the Market and Why You Should Buy 

The current economy is in a tricky spot as it has been slowly inching its way out of the sludge that the Mortgage Credit Crisis left America in. Rates, Home Prices, Demand, Inventory, and Inflation are all big terms that may or may not greatly affect the economy this year. Mortgage Rates are still extremely low, although 2012 ended with a slight increase, which surpassed just mortgage rates.

Note: New Home Sales and Existing Home Sales: the two home "sales" reports measure different activity. The New Home sales report measures contracts, the existing home sales report measures closings, and neither is a perfect gauge of the housing market. And the Pending Home Sales Index measures the number of homes newly under contract. This index was created in 2001 (a good year for housing) with algorithms having a starting value of 100. The Pending Sales number showed a decline for the month, but year-over-year it was up - the 20^th straight month of increase. The National Association of REALTORS® shows December Pending Homes Sales at 101.7. Anything over 100, assumes that the current housing market is exceedingly better than the market in 2001. 2012 averaged at 100.3, making it a strong housing year.

Demand has now exceeded Inventory for buying a home combined with low mortgage rates, means Home Prices are going up (10% more than last decade’s peak, 6% in 2012 from 2011). While this shows the economy is improving, it gives Seller’s the upper hand.

Yesterday (Wednesday 1/30) the Federal Open Market Committee met for the first time this year. The FOMC made the decision to keep low (near zero) interest rates alone, for now as well as continuing their Bond Buying Program (committed at a minimum of $85B). Low rates mean low borrowing costs which means stimulated spending. The economy is “paused” due to weather-related disruptions and other “transitory factors”. Because of this, mortgage bonds made gains which put a stopper on recent mortgage rates’ rises. Mortgage Rates are not set by the Fed but the price of a mortgage-backed bond, (along with individual loan-level pricing adjustments and g-fees), which are based on supply and demand. Interest Rates will most likely go up when the National Unemployment Rate decreases to 6.5% (currently 7.8%). In other attempts by the Fed to aid the economy, their Quantitative Easing program (QE3) which began in September 2012 will continue in hopes keeping mortgage rates down. While the present seems like a “seller’s market”, buyer’s still have an amazing opportunity with a purchasing power of 21% higher than that of this time last year. If your maximum for buying a home in 2012 was $400,000, that budget is now up to $484,000. Basically you make the same payment while getting the bigger house. So, for the short term outlook of 2013, mortgage rates are going to stay low, inflation isn’t in sight anytime in the next several months, but housing inventory is going to continue to decrease. With all the effort the Fed has put into growth, stimulation, and rebuilding, mortgages rate will not be allowed to increase by much, if they do increase. 2013 is going to be a great year to buy or refinance!

End of 2012 Housing Statistics

• Case Shiller 20-City Index came in up 5.5%, slightly higher than the 5.2% consensus.
• CNNMoney surveyed economists on housing recovery.
• Predictions: Just under 1 million housing starts in 2013, right about the 28% rise in home building in 2012. Moody's Analytics is predicting even stronger growth, a 50% rise both this year and next year, which will likely create more than 1 million new jobs. Home values will increase about 3.7%.
• FHFA Housing Price Index rose by 0.6% in November from October - prices rose 5.6% in the twelve months ended in November.
• The National Association of Home Builders has released the highest the Remodeling Market Index (RMI) reading since the 1st quarter in 2004. The RMI reached 55 in the last quarter of 2012, increasing five points from the previous quarter, according to the National Association of Home Builders (NAHB). The RMI was above 50 in all four regions of the country. Good indicator of high remodeling activity in the future.
• Housing Starts rise by 12.3%to 954K units on an annualized basis and above the 889K expected.
• CoreLogic reports that 1.3 million homeowners moved into positive equity during the third quarter of 2012 as home prices rose across the country
•  CoreLogic reports that home prices, including distressed sales, rose by 7.4% in the year ended in November.
•  U.S. homes in foreclosure inventories dropped to 3.51% in November from 6.35% in October and down from 10% in September

Property Listings

Are you or someone you know in the market for buying a new home? Access now has house listings in Northern California available! All listings have the Realtor’s contact information as well as housing payment information. Find these listings on our Pinterest Page:

www.pinterest.com/accessloans