• Making Home Ownership More Affordable - With the recent reduction in down payment requirements for first time homebuyers on loans offered by FannieMae and FreddieMac, there is, understandably concern regarding the potential pitfalls and impact on the overall health of the housing market.  We all remember – all too well the times of easy financing, no money down, stated income… stated asset loans and the devastation those programs wrought upon our economy and even the world. Rest assured this is a very different situation.  There is little data to support that lower down payments result in higher defauts – by themselves.  Coupled with relaxed credit standards, absolutely, but with sound underwriting of a borrower’s ability and willingness to repay, these can be very useful products.  Look at VA loans – Veterans Administration loans – which offer 100% financing have some of the lowest default rates in the country – consistently outperforming even 20% down loans.  FHA has for years offered down payments as little as 3.5% – but as with anything else, lower credit standards for FHA has resulted in higher default rates than conforming loans and VA loans.  The key of course is a borrower that has demonstrated the ability to repay debt, the desire […]
  • Life After a Bankruptcy… - By Mason T Pruner Mortgage Banker / Branch Manager  Boca Raton, FL – Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances. Running a close second is the negative stigma which is often attached to the process. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results. Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become. This is a graphic illustrating the number of personal bankruptcies per capita by state as of 2013: One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy […]
  • Squashing Mortgage Myths for Homebuyers (And Realtors) - The Mortgage process.. and mortgage offerings are probably some of the most confusing and misunderstood aspects of buying a home.  Those that have been through it 10 years ago would not recognize it now… those going through it for the first time may find the sheer amount of conflicting information and mis-information – not to mention the documentation required to get a loan approved daunting. Myth #1:  I need 20% down to buy a home. – This Myth more than likely stemmed from the beginning of the crisis when mortgage insurance companies severely restricted their offerings, leaving the only low down payment option as FHA.  Currently for a conventional loan you can have as little as 5% down.  For a FHA loan you can go with 3.5% down and VA loans have no down payment requirement in most cases. Myth #2:  My credit isn’t perfect so I cant buy a home. – The truth is that there are many options for homebuyers with less than perfect credit.  FHA still allows for some derogatory credit items on your credit report.  Medical collections are typically not a problem either.  Prior bankruptcy, short sales or foreclosures simply mean there are waiting periods required […]
  • 2014 Home Mortgage Pricing Changes and its Impact on Rates (Updated) - **UPDATE** No Sooner has I posted this blog that the incoming Director of the FHFA (upon being sworn in Jan 6th) will be delaying the rollout of these changes “Until such time as I have had the opportunity to evaluate fully the rationale for the plan,” Here is the original Blog – As the country begins the transition from a stimulus based “recovery” policy to one trending toward a “normal” market – although “normal” does not mean back to what we were used to as it relates to home finance in the post Dodd/Frank world – we are beginning to see what this will look like in its impact on mortgage rates. I have already written about the changes brought on by the Ability To Repay rules which are part of the Dodd/Frank financial reform bill so today I would like to address recently announced changes to risk based pricing models that will be implemented for conforming loans – those loans sold to FannieMae and FreddieMac. As noted in the recent announcement from the FHFA (Federal Housing Finance Agency): The Federal Housing Finance Agency has directed Fannie Mae to increase pricing, reflecting a “gradual progression to more market-based pricing.” But […]
  • CFPB releases final rules – this is BIG folks! - There has been much angst over what and when the CFPB would do relative to the mortgage industry and the rules governing “Ability to Repay” and the associated QM/QRM (Qualified Mortgage /Qualified Residential Mortgage) rules.  The impact of these new regulations could have lasting impact on the state of the housing recovery. The impact of these new regulations will affect many prospective buyers by limiting the maximum qualifying mortgage amount.  The  “Abilty to Repay” rule actually is a wide-reaching compliation of rules that establishes what loans qualify for “Qualified Mortgage”  or QM designation.  This designation exempts the lender from some rather steep reserve requirements – basically requiring the lender to maintain “skin in the game” for “higher risk” mortgages. Additionally, since  under the Dodd/Frank bill, a borrower can defend themselves in court in cases of default and it is up to the lender to defend whether ALL the rules were followed to the letter in underwriting the loan- AND IF its determined  that the lender did not follow “good judgement” in underwriting the loan it can end up very costly for the lender.    The lender is required to follow “good judgement” in the following 8 underwriting factors: Current or reasonably expected income or assets Current employment […]
  • The Proverbial Left & Right Hands of Government messing up Housing - Recent statistics have shown a growing recovery in the housing market around the country. Housing prices are up on average 12% in the last 12 months, sales are growing and equity in existing homes is improving – allowing more homeowners to once again consider move up opportunities that have not existed in years due to negative equity positions. With the improvements in housing, the economy has started to rebound, new home sales are up and overall it’s starting to look like we are out of the woods in housing… right? Not so fast… The housing market has improved – and mostly because the government has stayed out of it aside from some restructuring of lending disclosure guidelines – but that is rapidly changing and the government doing their typical “closing of the barn door after the fire has been put out and the horses have all left” process. What do I mean by this? Well, the wheels of any housing recovery only roll well if there is a supply of money available in the way of mortgage loans. For the last several years between FHA and FannieMae/FreddieMac, and the monetary policy of the Federal Reserve keeping rates at rock bottom […]
  • How The Velocity of Money Impacts Home Loan Rates - For immediate release May 8, 2013 What is the Velocity of Money and How Does it Impact Home Loan Rates? By Mason T Pruner, Mortgage Banker Pruner Financial Group  BOCA RATON, FL – If you’ve been watching the economic news, you’ve probably noticed that market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.  Here’s why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money. With the job market still very sluggish, consumers aren’t spending much money these days, and businesses are still reluctant to spend money to make investments in their business. With the present velocity at low levels, inflation […]
  • Inconsistent and OVER Regulation of The Mortgage Industry - Since the Financial Crisis that began in mid-2007, there has been a lot of anguish on the part of homeowners, losses by banks, bailouts by government, and of course, new regulations – mostly in the form of the Dodd/Frank Bill – also known as the Dodd-Frank  Wall Street Reform and Consumer Protection Act – was signed into law on July 21, 2010.  Within its  2500 plus pages, categorized into 16 titles, it requires the creation of  243 rules, conducts 67 studies, and issue 22 reports – and creates more governmental agencies – like the Consumer Financial Protection Bureau.  Interestingly enough, the Act was drafted to add more oversight and control into the financial services industries, yet the CFPB is not in itself answerable to anyone specifically.  The Bureau is charged with interpretation and implementation of the somewhat vague at times rules within the Act.  Additionally this agency doesnt necessarily have to “play nice in the sandbox” or follow the lead of other existing regulatory agencies that already manage the mortgage industry like HUD, FDIC, OCC, FHFA, FTC, Federal Reserve, OTS, FCA, and NCUA(Credit unions), to name just a few… the new CFPB doesnt directly answer to any of these other entities or Congress (except a […]
  • FHA Changes are a Commin’… and this is no April Fools Joke. - HUD –  (US Dept of Housing and Urban Development) which oversees FHA loans has just issued a Mortgagee Letter (the information they send to lenders to advise of upcoming changes) which will be a very big change for many people looking to buy homes.  I urge you to read this carefully as it could affect your buyers if you are a Realtor or your own loan if you are considering FHA financing. Since the advent of the Credit Crisis in 2008, and the departure of Subprime Loans from the lending landscape, FHA Loans have become the only option for many potential homebuyers.  The low down payment, and higher debt ratio allowances along with the lower credit score requirements have enabled many people to buy a home that otherwise could not.  Results, frankly have been mixed.  Deliquencies and defaults on FHA loans booked SINCE 2008 are still near 9% of the total portfolio and the FHA insurance fund is becoming severely undercapitalized. (As of Sept 2012, the current deliquency rate for FHA loans was a totally unacceptable 9.6% with nearly 740,000 loans “severely deliquent” and there were over 280,000 claims in just the first 9 months of 2012 against the insurance […]
  • Life After Bankruptcy - Life After Bankruptcy By Mason Pruner, Manager/Mortgage Loan Originator Alterra Home Loans   Boca Raton, FL – Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances. Running a close second is the negative stigma which is often attached to the process. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results.  Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become.  One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On […]