Effective Mortgage Company

You Can Still Refinance Even If You Don't Have Equity

2012-02-23T13:25:00.002-08:00

Harp 2.0

FHFA, Fannie Mae and Freddie Mac Announce HARP Changes to Reach More Borrowers

2011-10-27T13:44:00.000-07:00

HARP is unique in that it is the only refinance program that enables borrowers who owe more
than their home is worth to take advantage of low interest rates and other refinancing benefits.
This program will continue to be available to borrowers with loans sold to the Enterprises on or
before May 31, 2009 with current loan-t0-value (LTV) ratios above 80 percent.
The new program enhancements address several other key aspects of HARP including:

Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers; Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;

Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;

Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

Small Claims Court

2011-10-27T13:37:00.000-07:00

Increasing Small Claims to $10,000: Commencing January 1, 2012, the small claims court jurisdiction will generally increase from $7,500 to $10,000 for an action brought by a natural person. For a claim of bodily injury from a car accident, the increase to $10,000 will not occur until 2015. The dollar limit in small claims court for an action brought by a corporation or other entity will remain at $5,000. Senate Bill 221.

What not to do when you are in the buying process!!!

2011-10-25T13:37:00.000-07:00

If you plan on buying a home, are in the process or have been pre-approved to buy remember these simple things.

1. Do not change jobs, become self-employed, or quit your job!

2. Do not buy a car or a van, or a truck or you may be living in it.

3. Do not use charge cards excessively or let accounts fall behind.

4. Do not spend money you have set aside for closing.

5. Do not omit debts or liabilities from your loan application.

6. Do not buy furniture.

7. Do not originate any inquires into your credit.

8. Do not make large deposits without first checking with your loan officer.

9. Do not co-sign for anyone.

10. Do not change bank accounts or move money around.

If you are unsure at anytime or for even a second doubt what you are doing call us first it could save you a lot of heart ache in the end. Contact us anytime with questions or to get pre-approved to buy a home!

5 Steps to protect your rental property

2011-09-16T14:00:00.000-07:00

1. Take down the “For Rent” signs. Think about it: you don’t want to advertise that your place is vacant – or worse, that there are new Maytag appliances sitting inside. There are many other ways you can market your home for rent (ads online are a good start).
2. Keep up the yard. Maintaining your rental property’s yard makes it appear as though a tenant is living there – even when there isn’t. (And not only will weeds, broken sprinklers and over-grown grass make your property look abandoned; they might also keep potential renters away.)
3. Put the lights on a timer. Leaving a porch light on for 24 hours a day is just as noticeable as a property that is completely dark (especially to a criminal). Having the lights go on a regular schedule gives the appearance that someone is home.
4. Use the blinds. There is a debate in the law community over whether it is safer to leave blinds opened or closed for better security; I recommend both. Keep the downstairs blinds closed (so that no one can see in) and leave the upstairs blinds open (so that it appears that someone is home).
5. Screen interested callers. However you advertise your property for rent, you can’t control who contacts you. Use caution when speaking to interested renters: revealing too much detail up front may compromise the security of your rental property. Is a caller really interested in renting your property or is the caller trying to find out where your obviously-vacant property is located? You can never be too sure – which is why it may make sense to hire an experienced property management company to do the tenant screening work for you.

As a rental property owner you want to attract potential renters, not criminals. Posting a real estate ad with the description “move-in-ready, fully-furnished, new appliances” is going to pique people’s interest – but, you just want to be aware of who you attract.

Author: Tony Sena on Zillow

September is Realtor Safety Month

2011-09-02T13:10:00.000-07:00

Take precautions and be smart about your safety all it takes is doing a few extra measures to increase your safety.

Google: Check out you clients before you meet them. There is so much information out there now.

Meet your clients at your Office: Take a copy of their id, let your co-workers see who you are with.

Any added measurements are good ones

Craport for two - and other horrific MLS waste

2011-09-02T12:19:00.000-07:00

Craport for two - and other horrific MLS waste

HomePath Buyer Incentive

2011-05-25T13:28:00.000-07:00

Fannie Mae is currently offering buyers up to 3.5% in closing cost assistance through June 30, 2011.

The HomePath property buyer must meet the following qualifications to be eligible:

•Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer in order to be eligible.
•The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
•The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
•Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
•Buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
•If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Points, Rates, Fees And What It Means

2011-05-23T14:23:00.000-07:00

It is not only important to understand the type of motgage loan you are getting but it is also important to understand the costs associated with your mortgage. All cost will be That will be paid at the closing of escrow.

Interest Rates

When you get a mortgage, you are charged an interest rate. This is the rate which the lender charges you for using their money to buy a home. It determines how much your monthly payments will be. Generally speaking, the higher the interest rate, the higher your monthly payment.

Mortgage interest rates change constantly. Daily, even hourly. If you speak to a lender and are quoted a specific interest rate, that's not to say you'll necessarily get that rate when you close on your loan. Not unless you formally lock-in that rate with the lender. Locking in an interest rate will guarantee you get your loan with a particular interest rate. Lenders will allow you to lock in for 15, 45 or 60 days. But the longer you lock in, the more expensive it will be, since it's more of a risk to lenders.

Discount Points

Discount Points also known as a "buy-down" are an up-front fee paid to the lender at closing to buy-down or lower your interest rate over the life of the loan. Each point is equal to one percent of your total loan amount. If you have a $200,000 loan, one point would equal $2,000. The more points you buy, the lower your interest rate, but this will increase the money needed at closing.

The decision to decide whether to buy down a rate should be based on how long you plan on living in your home and what you can afford to pay each month toward your mortgage. If you plan on living in your home for more than five years, it's probably a good idea to purchase points. The longer you live in your home, the more you can save on interest over the life of the loan.

Fees

There are always fees associated with getting a mortgage, these fees cover the cost of processing and underwriting the loan. These fees include charges such as lender fees, appraisal, credit report, escrow and title fees and the cost can range anywhere from 2% to 5%. Deciding which mortgage to get may depend on what each lender charges because different lenders may charge different amounts. Some may charge lesser closing fees to lure you in, but may charge you a higher interest rate, which means you may pay more in the long run. But everyone has different needs. You may or may not be able to afford to pay more at closing and are willing to pay more over the long term.

Before it comes time to close, do your homework, make sure there are no hidden fees, and ask your lender lots of questions so that you understand all the costs involved with your mortgage.

9 Ways You Could Mess Up This Tax Season

2011-02-09T16:55:00.000-08:00

Here are some common mistakes you might make and what to do about them:

1. Taking a refund anticipation loan. A RAL is a short-term predatory loan in the amount of your tax refund, minus any tax preparation fees and interest. The rates, depending on the lender and the amount, are sky-high. According to the Consumer Federation of America, one bank this season will charge $61.22 for a RAL of $1,500, which translates to an APR of 149 percent. RALs are harder to find this year, thanks to action by government agencies, and H&R Block will no longer be offering them. Instead it is marketing a variation called "the refund anticipation check." In this case, a bank opens a temporary account into which the IRS deposits your refund. The bank then either pays you with a check or via a prepaid card. The bank charges $30 for the account, and the tax preparer may lard on more fees.

To avoid: RALs and RACs are not only costly but also totally unnecessary. The IRS these days typically shoots out refunds within two weeks to taxpayers who file electronically and ask for direct deposit. Taxpayers can also save time by having the refund dispatched automatically to a pre-existing payroll card or to a prepaid card they open. (Just watch out for fees!) For advice in choosing a prepaid card, check out the National Consumer Law Center's tip sheet.

2. Getting a big refund. You may think you're hot stuff because the government is going to pay you a big wad of cash. But a fat refund simply says that you are having too much withheld from your paycheck with the result that you are giving the government an interest-free loan. Some people say that they over-withhold because they like the forced savings, but seriously, you're better off contributing any excess tax during the year to a 401(k) — where it will earn interest — or using it to pay off your credit cards — which will save you interest.

To avoid: It may be too late to do anything this year, but to make sure that your withholding is not too big and not too small, use an IRS calculator for 2011.

3. Not paying attention to your 1099s and other proof of income. If you're like me, you toss these things into a file folder and look at them on maybe April 12. Big mistake. I've learned from hard experience that banks, employers and others who provide the forms make errors. The payer has to send you the form no later than January 31 and has until February 28 to file the document with the IRS. That gives you as long as a month to correct any errors.

To avoid: Check right the forms immediately. If you spot errors and the payer hasn't yet sent the form to the IRS, s/he can simply tear up the messed up 1099 and issue a new one.

4. Not itemizing. When calculating your taxes, you can elect to take the standard deduction ($11.400 for married couples filing jointly and $5,700 for single people for 2010) or itemize deductions. An admittedly ancient GAO study found that about 510,000 households overpaid on their taxes by failing to itemize, even though they qualified for the most common deductions, for example, home mortgage interest and property taxes.

To avoid: Using tax prep software programs that query you about deductions should keep you from becoming one of the half million over-payers. Conversely, that generous standard deduction may be large enough so that you won't have to endure the headache of itemizing.

5. Forgetting about the oldster deduction. The federal government gives you a little tax help if you've managed to last beyond your working years and don't itemize. If you're over 65 and single, you can add $1,400 to the standard deduction, or $1,100 each for you and your spouse if you're married filing jointly. A married couple, both over 65, can get a total standard deduction of $13,600: $11,400 plus $1,100 for each spouse.

To avoid: If you're like Nora Ephron, author of "I Remember Nothing," you're in big trouble. Again, tax prep software will prompt you to take the extra deduction.

6. Failing to deduct non-cash donations to charity — even though doing so is a big pain in the neck. This deduction (only available to those who itemize) is close to my heart since I moved this year and wound up donating about 2,500 pounds of clothing and household goods. When you give, you usually get a receipt that says "3 bags full" or somesuch. If you gave more than $500 worth last year, however, that will not be enough documentation to satisfy the IRS. You will have to struggle through Section A of Form 8283 Non Cash Charitable Contributions, which requires you to list every item's fair market value, when you got it and what you paid.

To avoid: You can't really sidestep this form, but does the IRS really want to know that you bought one dress at Nordstrom's, one at Macy's and another at JC Penney? I plan to write in "department stores" and guess the approximate dates. The Salvation Army provides a valuation guide to help determine the market value of most items you're likely to give. BTW, you may not deduct more than 50 percent of your adjusted gross income in any one year — but you can carry over any excess to the following year.

7. Forgetting to deduct old refinancing points. If you refinanced your mortgage this year, you can deduct the points over the lifetime of the loan. If you have a 30-year mortgage and you paid $3,000 in points, you can write off one-thirtieth or $100 this year. Of course, if you refinanced in June, you only get six months' worth or $50. That's nothing to celebrate, but if you refinanced previously, let's say on January 1, 2008 (just to keep things simple), you can deduct the value of the points you hadn't yet taken — about 28 years' worth — in the year of a new refinancing.

To avoid: Put aside the papers documenting your old points in the front of your tax file.

8. Being too chicken to take the home office deduction. For years, you've been hearing warnings that this is a red flag for auditors. Not so. If you qualify, you can subtract a significant chunk from your tax bill. If you don't qualify, you'll get in trouble.

To avoid: Follow the rules. First, the office has to be your principal place of business, and it must be used exclusively for that purpose, not for playing video games, watching reruns of "I Love Lucy" on Hulu or doing homework. And, you cannot deduct more than your business income. Let's say your office is 100 square feet and your house is 2000 square feet. You can then deduct as business expenses 5 percent of your utilities, insurance, homeowner association fees, repairs, cleaning and maintenance. On top of all that, you can take off 5 percent of your mortgage interest and property taxes. (Using those deductions as business expenses rather than as personal itemized deductions reduces self-employment income, which in turn lowers your Social Security taxes.) You also get a depreciation deduction, for the wear and tear on your office over a set time, usually 39 years. It's a complicated calculation so you'll have to consult IRS Publication 534, but here's a rough idea of how it works: You take the fair market value of your home minus the land. Say it's $250,000; then figure out the amount of the property used for business, in this case 5 percent or $12,500. Divide that by 39, and you get a depreciation deduction of $320. Deductions for depreciation do come back to bite you when you sell your house, however. You will have to pay a capital gains tax on the total amount of depreciation deductions you took, assuming you sold at a profit. Right now, you wouldn't pay much — 15 percent — but capital gains tax rates are due to sunset in two years.

9. Throwing yourself into the arms of a "professional." Just over half of all taxpayers have their returns prepared by a supposed professional preparer. But commercial services, whether provided by Uncle Morty, H&R Block or a high-powered CPA, are often less than fabulous. When GAO investigators went undercover to have returns done by commercial preparers, they found that the results were often incorrect. And IRS data show that 56 percent of professionally prepared returns showed significant errors, compared with 47 percent of those done by the taxpayer. You have no guarantee of quality, because only California and Oregon require tax preparers to take a test. What's more, once you are a customer of a big-chain preparer or even a neighborhood accountant, you become a target for sales pitches — for RALs and RACs as well as fee-laden insurance policies and retirement plans.

To avoid: If you are a wage earner who takes the most common deductions (home mortgage interest, property taxes, charitable donations and state taxes) and credits (child care, for example), you probably will do better simply to buy a software program to help you complete your return.

- By Marlys Harris Thursday, February 3, 2011

(Yahoo News-http://custom.yahoo.com/taxes/article-112017-87de756f-5126-4c80-9495-2d9218640c30-9-ways-you-could-mess-up-this-tax-season)

10 Tax Mistakes Parents Make

2011-02-09T16:43:00.000-08:00

Top 10 common mistakes that parents make when they do their taxes:

Failing to quickly get a Social Security number for a new child:

Mark Luscombe, principal federal tax analyst for the tax firm CCH, says that even newborns need Social Security numbers right away. Hospitals make it easier by helping new parents with the paperwork, but parents are still responsible for making sure they get the number and use it correctly when filing taxes. Otherwise, Luscombe says, the IRS could disallow some of the tax benefits.

Luscombe adds that parents themselves need to make sure they have their correct Social Security number on their tax forms. This can be especially challenging for people who recently got married, changed their names, and requested a new number. "If the name on the tax return and the Social Security number don't match up, the IRS gets concerned," he says.

Omitting the dependent exemption for babies born at the end of the year:

Even babies born on December 31 provide their parents an entire year's worth of exemption status. "You don't have to apportion it to the time the baby was alive," explains Barbara Weltman, attorney and author of J.K. Lasser's 1001 Deductions and Tax Breaks 2011. She adds that even high-income tax payers get the full value of the exemption this year.

Overlooking the adoption credit:

This credit, which can be worth about $13,000, is designed to alleviate some of the expenses associated with adopting a child. But because adoption often takes more than one year and involves many types of expenses, parents can get overwhelmed with the paperwork. Bob Meighan, vice president of TurboTax, recommends keeping careful track of receipts, then filing for the credit the year of the adoption.

Forgetting to keep careful records of care providers:

Many working parents are eligible for the child and dependent tax credit, which can help ease some of the costs of daycare, babysitters, and after-school programs for children younger than 13. What often trips parents up, says Luscombe, is that they forget to record the tax ID or Social Security numbers of the care providers throughout the year. Without that information, they can't file for the tax credit. "If you've had a succession of babysitters and have no Social Security numbers, then you could lose out on part of the credit for not doing your homework," he says.

Stacey Bradford, author of The Wall Street Journal's Financial Guidebook for New Parents, adds that summer day camp fees also count if both parents are working, looking for work, or studying, as long as the child is under age 13.

Claiming something other than head of household status:

Single parents in particular often forget to claim head of household status, which provides certain tax advantages, including the ability to claim dependents. "There's a lot of confusion about the head of household filing status and a lot of people don't seem to understand what that means," says Luscombe. Single parents could be eligible for this status if they paid more than half the cost of maintaining their household throughout the year and live with their children for more than half the year.

Ignoring the child tax credit:

The child tax credit, which is worth up to $1,000, phases out for higher earners, but most taxpayers qualify for it, says Meighan. It applies to children under age 17 who live with the parent claiming the credit for more than half the year.

Not filing taxes for an older child with a part-time job:

"Parents forget that an older child might have a tax filing requirement," says Meighan, even if that child is still a dependent. And failing to file that older child's taxes could mean losing out on a refund, because teens often don't earn enough to have any tax liability, even though their employers have withheld taxes. "To get that money back, they have to file a return," adds Meighan.

Failing to take advantage of tax-advantaged savings plans:

Most adults have never heard of 529 college savings accounts, which allow parents to invest after-tax money and grow it tax-free as long as they use it to pay for tuition. Coverdell education savings accounts, which come with strict contribution limits ($2,000 a year) as well as income limits, also offer tax advantages. Similarly, many parents forget to put pre-tax money aside (up to $5,000) into flexible spending accounts offered through their employer to pay for childcare expenses.

Skipping education write-offs:

From the American Opportunity Credit to the Lifetime Learning Credit, there are many tax benefits that help alleviate some of the cost of paying for college. Parents often forget that they can claim student loan interest on their own taxes if the college student is still a dependent--even if the college student is the one paying the loan interest, says Meighan.

Bradford adds that many parents don't realize that a number of states allow deductions for contributions to college savings plans. In New York, she says, residents can write off $5,000 for single filers and $10,000 for married joint filers. She suggests checking savingforcollege.com to see if you qualify.

Repeating classic errors that all taxpayers make:

Eric Smith, IRS spokesman, says the most common errors include forgetting to sign returns, just one spouse signing it, forgetting to attach a W-2 form, failing to use enough postage, and writing the name and address on the mailing envelope illegibly. "Take advantage of computer technology, and most of those mistakes go away," he says.

-By Kimberly Palmer Kimberly Palmer – Mon Feb 7, 4:46 pm ET

The Truth Behind the American Dream

2011-02-07T10:18:00.000-08:00

Effective Mortgage Company along with Industry experts will be a guest speaker at the workshop "The Truth Behind the American Dream." The information gained is invaluable for homeowners in trouble, sellers, buyers and investors. You will not be hearing the standard, predictable, corporate all leveling whitewash in any area. "The Truth Behind the American Dream" will provide you with the nuts and bolts infrastructure to create Your Own American Dream.

Reclaim the American Dream
Learn to improve your financial road map
Life after The American Nightmare- Foreclosure and Short Sale
Learn to move beyond your fears and accomplish your DREAM

Saturday, March 5, 2011

9:00 am -1:00 pm

Calabasas Country Club

4515 Park Entrada Calabasas, CA 91302

Reserve your seat today! Register at http://www.royalrep.com/

Effective Mortgage Co. will be giving out a limited amount of seats for free so please call our office today!!! 818-773-0033 leila@effective-mortgage.com

FHA Mortgage Insurance

2011-01-19T11:34:00.000-08:00

HUD's Required Lender Protection

Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages. FHA requirements include mortgage insurance primarily for borrowers making a down payment of less than 20 percent.

Annual Mortgage Insurance Premium
President Obama signed a bill in August of 2010 giving HUD the flexibility to increase Annual Mortgage Insurance Premiums. Under the law, effective as of October 4th, 2010, HUD is allowed to increase the amount of the Annual Mortgage Insurance Premium from .5% to 1.5% on loans with a down payment of 5% or more. The Insurance Premium on loans with less than 5% down payment increases from .55% to 1.55%.

HUD is not implementing the maximum amount at this time. As of October 4th, 2010, loans with a down payment equal to or greater than 5% will be charged an Annual Premium of .85% and loans with a down payment of less than 5% will be charged .90%.

Upfront Mortgage Insurance Premium
Effective for loans on or after October 4th, 2010, for FHA regular purchases and refinance products, the Upfront Mortgage Insurance Premium is 1.00%, which is decreasing from 1.5%.

FHA's monthly mortgage insurance payments will be automatically terminated when these conditions occur:

•For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78%, provided the mortgagor has paid the annual premium for at least 5 years.

•For mortgages with terms 15 years and less and with loan to value ratios 90% and greater, then annual premiums will be canceled when the Loan to Value ratio reaches 78%, regardless of the amount of time the mortgagor has paid the premiums.

•Mortgages with terms 15 years and less and with loan to value ratios of 89.99% and less will not be charged annual mortgage insurance premiums.

Mortgage Loan Originator Requirements (New Law)

2011-01-13T11:39:00.000-08:00

Anyone acting as a mortgage loan originator (MLO) without and MLO license endorsement will be guilty of a crime punishable by six months imprisonment plus a $20,000 fine. And a broker cannot employ or compansate a real estate licensee for MLO activities unless that licensee has a license endorsement. This law has also given the Department of Realestate (DRE) the authority to deny or revoke a MLO license endorsement or take other action. This amends the MLO requirments for finance lenders and residential mortgage lenders under the Department of Corporation. Senate Bill 1137, effective January 1, 2011.

To verify if a Mortgage Company and Mortgage Loan Originator is licensed you can go to:

http://www.nmlsconsumermortgage.com

KEY INDICATORS [1/11/11]

2011-01-13T11:30:00.000-08:00

Gold $1378.50/ounce [down]

Crude Oil (Brent) $97.53/brl [up!]

U.S. Dollar to:

Euro .7749 [up]

Japanese Yen 81.95 [down]

6-mo Treasury Bill Yield 0.17%

10-yr Treasury Note Yield 3.36%

[6-month unchanged, 10-yr up 6 bps]

11th Dist Cost of Funds 1.571%[-]

30-yr Fixed-rate Mortgage 5.12%

15-yr Fixed-rate Mortgage 4.51%

1-yr ARM 3.78%

[HSH average includes jumbo rates: 30-yr down 7 bps; 15-yr down 5 bps; 1-yr ARM down 6 bps]

Freddie Mac weekly average rate 4.77% [prior week: 4.86%]

Mortgage Bankers Association Mortgage Applications Index week ending 12/31:

Overall Up 2.3%; down 3.9% the week prior

Purchase Money Loans:

Down 0.8%; up 3.1% the week prior

Refinancing Loans:

Up 3.9%; down 7.2% the week prior

Jobless Claims 1/1:

409,000 prior week 391,000 Continuing claims down 3500 to 4.103 million

Employment Report Dec:

Unemployment rate fell from 9.8% to 9.4% - 103,000 new payrolls (disappointingly weak)

FannieMae WaysHome- Learn Your Options If Your Drowning In Your Home

2011-01-06T09:31:00.000-08:00

Today, January 6, Fannie Mae launched WaysHomeTM, a new interactive video to educate homeowners about their options to avoid foreclosure, motivate them to make the right decisions, and encourage them to seek help. WaysHome is part of Fannie Mae's Know Your OptionsTM consumer initiative to help today's struggling homeowners and is available on KnowYourOptions.com.

Overview
A unique and innovative learning tool, WaysHome allows homeowners to put themselves into real-life situations and make decisions -- then see the consequences of these decisions play out in front of them. Through WaysHome, homeowners can:

1. Participate in an interactive video simulation.
2. Select a character and go through the simulation "playing" that character.
3. Follow characters as they encounter financial hardships and challenges that affect their ability to pay their mortgage.
4. Choose different paths based on real-life situations.
5. Experience the positive outcomes or negative consequences of their choices
(i.e., if they avoid taking action, foreclosure may be their only option).
6. Learn about options that may be available to help.
7. Discover the right paths to avoid foreclosure, know their options, and find their way home.

Benefits to You
Our research shows that many homeowners still don't know about -- or understand -- their options to avoid foreclosure. In fact, many homeowners who are seriously delinquent or in foreclosure have little to no contact with their mortgage company. WaysHome is designed to bridge that gap and encourage homeowners to take action before it's too late.

WaysHome Video Link
http://flsvideo.com/assets/Ways-Home/

Weekly Market Update

2010-12-16T16:41:00.000-08:00

Thanks largely to the likelihood of passing a tax deal, interest rates have been climbing at a rapid pace and analysts have brought worries about rising future inflation back into the economic discussion. It may at first seem like just another swing-- from concerns about possible deflation to anxieties about rising inflation, and back again but this time the worries may have some staying power.

The two central issues here are extensions of tax benefits: first to the unemployed, second to higher-income taxpayers. What is remarkable about these two central issues is that, taken together, they amplify a few worrisome possibilities for the economy's future. Specifically extending unemployment benefits expands the economy's growth- a good thing but probably an inflationary thing. Further, foregoing receipt of higher taxes from wealthier citizens most likely means that we will have to auction even more Treasury securities which is also potentially inflationary.

Now, a strengthening economy, both of these measures should help the economy grow (in the short term, at the least). This nearly always translates into higher inflation and in anticipation of that our interest rates will start to climb as indeed they already have. Further, the likelihood of even more massive auctions of Treasury securities increases the near certainty that interest rates will rise (as demand for Treasury securities fails to fully cover the number of securities being auctioned; its a supply-and-demand equation).

The credit markets don't wait until after something has happened; they react in advance of whatever their investors believe will happen. Investors have begun to worry about inflation already and they anticipate that the seeds of higher interest rates are being sown. Thus Treasury security interest rates are already on the rise and may continue to rise for as long as the tax deal is in place or until something else captures the attention of traders, investors and economists.

It is difficult to predict what, if anything, will grab the markets attention so it seems relatively likely that the rising interest rate trend will be with us for quite some time. However, the bond guru Bill Gross of PIMCO Securities placed a $5.5 million bet on municipal bonds a few days ago. He apparently feels bond prices have fallen quite far and are likely to recover. (Bond yields decline as bond prices rise.)

The take away here is that while rates are clearly on the rise and could continue to rise, the economy is still reacting to external forces to government programs and legislation and not to forces inherent to the current economy itself.

KEY INDICATORS [12/14/10]

Gold $1401.60/ounce [down]

Crude Oil (Brent) $91.55/brl [up]

U.S. Dollar to&

Euro .7577 [up]

Japanese Yen 83.37 [up]

6-mo Treasury Bill Yield 0.18%

10-yr Treasury Note Yield 3.38%

[6-month up 1 bp, 10-yr up 30 bps]

11^th Dist Cost of Funds 1.654%[-]

30-yr Fixed-rate Mortgage 4.95%

15-yr Fixed-rate Mortgage 4.33%

1-yr ARM 3.82%

[HSH averages rates: 30-yr up 9 bps;15-yr up 7 bps; 1-yr ARM up 9 bps]

Mortgage Bankers Association Mortgage Applications Index

week ending 12/3

Overall

Down 0.9%; down 16.5% from the week prior

Purchase Money Loans

Up 1.8%; up 1.1% from the week prior

Refinancing Loans

Down 1.4%; down 21.6% from the week prior

Jobless Claims 12/4

421,000 prior week 436,000 (rev) total insured 4.086 million, down 191,000

Producer Price Index (PPI) Nov

Up 0.8% month-to-month with food/energy prices removed, up 0.3% (1.2% annualized)

Retail Sales Nov

Up 0.8% month-to-month without auto sales, up 1.2%

Home Affordable Refinance Program (HARP)- Refince up to 125% LTV

2010-12-16T12:06:00.000-08:00

Fannie Mae will accept mortgages refinanced through the Home Affordable Refinance Program (HARP) with loan-to-value (LTV) ratios between 105.01% and 125%. The initiative is aimed at helping borrowers refinance their underwater mortgages. Loans owned or serviced by Fannie Mae or Freddie Mac are eligible for the program.

Loans modified through the program are required to either lower a borrower’s monthly payment or move them into a more stable mortgage, i.e. going from an adjustable-rate mortgage to a fixed-rate loan.

Guideline Highlights:

LTV > 105% to 125% with an unlimited combined loan to value (CLTV) for existing subordinate financing.
Owner Occupied Single Family Residences, including PUDs. (Condos are not eligible)
620 minimum credit score
Conforming limits only (Loans < 417,000). This is not available for high balance loans.
A full appraisal or interior/exterior 2055 is required.
30 year term only.

Program Uses Job-loss Coverage To Lure Home Buyers

2010-11-17T13:21:00.000-08:00

Realtor Program Lets Californians Offer Unemployment Coverage As Home-sale Incentive

(AP) LOS ANGELES (AP) - With job-loss fears keeping many on the housing market's sidelines, California's real estate agents' association has devised a scheme that uses unemployment insurance to lure wavering buyers into the fray.The California Association of Realtors program allows home sellers to fund insurance plans that pay buyers up to $1,500 a month toward their mortgages for six months if they're laid off from their jobs.The so-called Home Payment Protection Program is a nod toward the role job concerns are playing in the housing market, especially in high-unemployment states such as California, where 12.4 percent of the population remains without work."Most people out today wanting to buy houses have a fear: What happens if I lose my job?" said CAR president Beth L. Peerce. "This takes some of that stress away."Mortgage payment protection programs are nothing new, but what distinguishes the California scheme is that the protection is being pitched as a selling point for reluctant buyers, which sellers advertise as part of their home listings.Under the program, which covers buyers who lose their jobs within 12 months of escrow closing, a seller can choose to pay $200 for six mortgage payments of up to $1,000 each, or $275 for six mortgage payments of up to $1,500 each.CAR began offering the service last month but doesn't plan to begin advertising it widely until January, Peerce said.National Association of Realtors spokesman Walter Molony said he knows of no other states that are offering similar incentives for job-fearing home-seekers.The focus on consumers wary of making big purchases in a shaky economy recalls Hyundai Motor Hyundai Motor America's offer to buy back cars from people who lose their jobs.Analysts have credited that program with helping boost Hyundai sales since its introduction in January 2009, despite the ongoing economic doldrums.University of Southern California business professor Lars Perner, who specializes in consumer behavior, thinks the realtors' program could embolden those who have been putting off buying a home because of job insecurities."Taking away some of that fear of getting into big trouble is something that could easily tip the balance," he said.But Howard Wial, who directs the Brookings Institution's Metropolitan Economy Initiative, said the plan would help only a limited number of borrowers with middling mortgage payments and relatively short amounts of time spent without work.Indeed, nearly half of the state's unemployed had been out of work for an average of more than six months, according to state statistics based on the year ending in September.Meanwhile, although the state's average mortgage payment was $1,055 in September, according to tracking firm MDA DataQuick, the insurance payouts wouldn't cover mortgages in higher priced counties where sales have been most sluggish.Average monthly mortgage payments in San Francisco and Orange County were $2,469 and $1,772 in September, DataQuick said."It could have some impact on home sales, but I wouldn't overstate it," Wial said of the CAR plan. "I think it's a small step."

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Is the "No Doc" and "Stated Income" loan DEAD!!!

2010-10-14T14:40:00.000-07:00

Like many I can honestly say that the no doc loans and stated income loans were abused. Consumers, Brokers, Banks, Investors and anyone in the R.E. field took advantage of the market. There is no single person to blame but rather a compilation of faults, greed and people being naive. The lending business was taken so out of whack with no guidelines what so ever. Where common sense no longer was relevant were people alike were living in a fantasy world of more more more. Everyone was in the business of making money and the fact of the matter is Mortgage Brokers got the runt of it where in fact most of those who really made money were in fact not even licensed individuals. Any Joe Schmo off the street decided they were going to open a mortgage company. I ask the question as a licensed Real Estate Broker and Licensed Mortgage Originator where was the law then, where were the guidelines where were the laws and boards governing this Industry.

Now at a desperate attempt to bring stabilization to the market we have taken a 360 degree turn. Banks no longer want to lend , guidelines have changed, laws have formed that once again no longer make sense. People are developing this business who are not a part of it. How can one make laws about something when they do not do the steps. How can a dancer teach one to dance if they have no rhythm or have never danced. Although I am happy that the current market has pushed a lot of bad seeds out of the business the fact of the matter is that those of us that are left are professionals this is our career not a fad, not a trade, not a quick money making fix. We are here standing fighting to make the American dream of home ownership still a reality.

We wrote to the senator regarding no doc and stated income loans and were welcomed with the following response.

"Dear Mr. Vaziri: Thank you for contacting me to express your concerns about legislation to reform mortgage underwriting standards. I appreciate the time you took to write and welcome the opportunity to respond.

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) into law after many months of deliberation and debate. During the Senate's debate of this legislation, Senators Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) offered an amendment that prohibits mortgage originators from receiving payments based on the terms of a loan. Additionally, it requires lenders to verify a borrower's ability to repay with income and asset documentation. I supported this amendment, which passed the Senate by a vote of 63-36.

I understand that you feel this amendment could limit mortgage options for home buyers and reduce profits for honest mortgage brokers. However, I strongly believe that more must be done to help protect consumers from predatory lending practices that contributed to the subprime mortgage crisis. This legislation accomplishes this objective and works to prevent originators from steering home buyers into more costly loans. More importantly, it prohibits the practice of issuing "no doc" loans, in which home buyers are not required to provide evidence showing that they can actually repay their mortgage.

Once again, thank you for writing. While we may not agree on this particular issue, please know that I will keep your concerns about mortgage underwriting standards in mind should the Senate consider relevant legislation in the future. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.

Sincerely yours,

Dianne Feinstein
United States Senator"

Although I agree this loan type may have been abused and stricter guidelines must be enforced there are some people who need this type of loan and they deserve to have it. You can't compare a person applying for a no doc loan who is putting more than 20% down, has a 720 fico score, reserves and who is over all an A paper client to someone who in the past said they were a factory worker making 100k plus with a 600 fico score and 100% financing. Like I say we have to find a medium we can't keep bouncing from one extreme to another.

So to answer the question for many yes the "NO DOC" and "STATED INCOME" loan is dead for now.

Please we welcome your responses and opinions.

Leila

Beware of Foreign Buyers Wanting Quick Closings

2010-09-24T14:26:00.000-07:00

Recently there has been a flurry of inquiries from people over seas seeking to quickly buy residential property "in your area" priced in the $450,000-$650,000 range.

They request that you send them property information on these type homes for them to review via e-mail which is fine. Within two days they have selected one of the properties, want to pay cash, and want to close by the end of the month! They also provide you their financial planner's name and contact information to handle the funds transfer and request you recommend a local attorney to handle the escrow. This all sounds really good. Too good to be true?

Let the games begin. They will want to get the property under contract and transfer earnest money to the attorney's escrow account. They then decide to cancel and want money back which was really never there, thus basically seeking to rip off the attorneys' escrow account. These have popped up throughout the United States and an over excited agent could get taken in easily.

I was recently approached by these folks, sent them property information, received the "we must buy now" message and a request for an attorney to handle the escrow. Experience told me that this just seemed to be moving way too fast and seemed far too easy. I decided to do some investigating. Upon doing some research into the financial planner's firm, I uncovered the fact that this approach by these same "buyers" was in fact a scam. The financial planner was a fake name and I decided that no more of my time was to be spent with this, but I should take a few minutes to warn other real estate professionals.

Trulia has a lengthy series of comments from real estate professionals and their stories with this scam. Beware, be careful and do not fall for this creative scam. It could be very expensive.

Published on Monday, September 13, 2010 by Michael Davenport

Up to 3.5% HomePath Buyer Incentive and $1,500 Selling Agent Bonus on HomePath Properties

2010-09-23T15:39:00.000-07:00

Fannie Mae is offering buyers up to 3.5% in closing cost assistance and a $1,500 selling agent bonus on HomePath® properties. To be eligible for this incentive:

*Initial offers must be accepted on or after September 23, 2010

*Property sales must close on or before December 31, 2010, and close within 60 days of offer acceptance

*Buyers must be owner-occupants and confirm that the property will be used as their primary residence by completing a certification form (investors are excluded); and

*Selling agents must represent owner-occupant buyers purchasing a HomePath property to receive the $1,500 bonus and offers must be submitted on or after the effective date.

The incentive reinforces Fannie Mae's commitment to stabilizing communities and assisting buyers. For more information about the incentive, visit HomePath.com, read the press release, or contact a Fannie Mae listing broker.

House Bill Would Force Lenders to Decide on Short Sales in 45 Days

2010-09-21T10:06:00.000-07:00

Distressed homeowners looking for a way out of their mortgage that doesn’t involve foreclosure may find relief is on the way from a new bill introduced in the U.S. House.

The legislation would impose a deadline on lenders to respond to short sale requests, requiring them to return an answer to the borrower within 45 days.

The bipartisan bill, Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).

Lenders have taken a lot of heat for the elongated timelines it takes to get an approval on a short sale proposal.

“I have heard from many short sellers in Florida whose potential homebuyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”

The number of potential short sale properties is rising across the country. According to data from the National Association of Realtors (NAR), in the second quarter of

2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says her organization and Realtors across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.

“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.

“Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.

According to Rep. Rooney, the lending community has worked to improve the size and training of their workforce that handles short sales, but “progress has been extremely slow,” he says.

Rooney argues that for homeowners who owe more than their home is worth and are in real danger of losing their home, the short sale can help relieve them of the overwhelming financial burden of their mortgage.

Golder agrees. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.

Homeowners who are upside down on their mortgage may still be able to refinance

2010-09-10T10:24:00.000-07:00

Many homeowners are not aware of the special “Home Affordable Refinance Program (HARP)” offered through the government. HARP provides a refinance option to homeowners who owe more on their mortgage than their home is worth. This is great news for homeowners that are upside down on their mortgage who would like to take advantage of the current record-low mortgage rates.

Eligibility requirements for a refinance through HARP include:

• The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac.

• The amount you owe on your first mortgage does not exceed 125% of the current market value of your property.
NOTE: Some lenders may require a lower percentage.

• You are the owner-occupant of a one- to four-unit home.

• Your mortgage payments are current, at the time you apply.

• The refinance improves the long term affordability or stability of your loan.

Tax Credit Extension for Service Members

2010-08-17T15:39:00.000-07:00

The $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers have expired. However, service members who were on official extended duty outside of the United States for at least 90 days between Jan.1, 2009 and May 1, 2010, may qualify for a one-year extension.

For home purchases where a binding sales contract was signed by April 30, 2010, otherwise qualified buyers now have until September 30, 2010 to complete the purchase. Congress has extended the closing date to provide buyers who had binding sales contracts in place by April 30, 2010, additional time to complete their purchases.

How your credit score is calculated and tips to help keep it in good standing

2010-08-12T10:39:00.000-07:00

A recent report by FICO shows more than 25% of Americans have a credit score lower than 599. With a credit score that low, it makes it very difficult to take advantage of the current record-low interest rates. Below are the main factors, and the percentage of importance of each, that are used to determine your credit score.

1. Payment history = 35% – The most important thing is to pay your bills on time.

2. Amounts owed = 30% – This is the amount of money you owe versus the amount of credit you have available to you. A 20% debt-to-credit limit ratio is optimal.

3. Credit history = 15% – It’s better to keep old credit accounts than to close them.

4. New credit = 10% – Don’t apply for new credit without a good reason.

5. Credit mix = 10% – Try having a good mix of credit, such as credit cards, retail accounts, mortgage, installment loans, and consumer finance accounts.

Top 7 Tips for Using Credit Cards

2010-07-07T14:48:00.000-07:00

1. Avoid paying debt at 17%

Credit cards can be very useful if you are able to pay off the balance. However, when you start paying interest at 17%, the advantages are easily outweighed by the very high interest payments. Therefore, always seek to pay off the balance and avoid these rates of interest. These are the best strategy’s for avoiding paying credit card debt interest.

* Avoid overspending. – Don’t get carried away, just because you are paying with plastic rather than cash.
* Transfer the debt to a lower interest paying loan like mortgage or personal loan.
* Don’t see credit cards as a way of borrowing. See it as a convenient way of borrowing.

2. Pay Electronically at latest date.

Many credit card companies give you up to 6 weeks to pay for your balances. When your statement arrives often you do not need to pay for 3 weeks. It is tempting to pay the account straight away. However, if you are short on cash, you can leave the payment until nearer the payment date. If you do pay close to the deadline make sure you:

* pay electronically for guaranteed payment (don’t rely on the post)
* Make sure you are not going to forget.

3. How to Deal with Missed Payment

If you don’t have a direct debit for minimum payment and you miss a payment by accident you should contact your credit card company as soon as possible. If you pay it as soon as you realize it may not incur a penalty for your credit rating. However, if is more than a few weeks late then it will count as a negative rating. In this case, the best thing to do is to try and challenge the negative rating. You could try write to the bank and apologize, saying it got lost in the post. If it is your first time they may agree to write off the negative credit rating

4. Use one Card for Collecting Points

Choose one credit card to put the majority of your spending on. It is best to choose a card that has an attractive points / reward system. This credit card you should always pay off at the end of the month.

5. Use 6 Month Interest Free offers

Many credit card companies seek to entice new customers through offering introductory periods of 0% interest. This can be very beneficial for consumers of credit cards. Personally I like to choose cards with 12 months interest free. They may charge a 2% balance transfer fee. But, this equates to only a 2% interest rate – you can probably get a better rate on savings. These 6 month interest free periods are ideal for dealing with periods of temporary cash shortfalls. It is a much preferable alternative than paying interest at 17%, the standard rate for some cards

6. Don’t overdo 6 month interest free cards.

It is tempting to take out as many interest free credit cards and invest the money elsewhere. However, I would definitely advise against this. Credit card companies are increasingly taking a dim view of people who do this. You may find it difficult to get cards in the future. The small gain of making 2% interest profit is not worth the negative standing with credit card companies.

7. Set Up Direct Debit to Pay Minimum monthly payment.

This means you will never miss the payment and is the easiest way to make sure you don’t damage your credit rating. Of course, you should try to pay the whole amount off. But, the main benefit of doing this is that you don’t need to worry about a missed payment which is very damaging for your long term benefit.