Remember, this month also has Thanksgiving at the end of the month. So figure from Wednesday, November 25 through to Monday, November 30, there will be no closings. Lenders will be closed on Thanksgiving and a lot of title companies will close early on Wednesday and not open again till Monday to Tuesday. The title companies can only close so many loans in one day.

With that being said, Knightlines Mortgage Services, LLC has the ability to close a new home loan purchase in under two weeks. And our title company that we recommend will work past normal business hours to get your loan closed before the deadline.

Call us today at 352.308.7219 to get your loan package moving forward and to be one step closer to putting an extra $8,000 in your pocket.

The topics that are covered under MDIA include:

1. New Fee Restrictions: Mortgage originators cannot collect any fees (other than a reasonable fee for a credit report) until the borrower has RECEIVED the early disclosures, EG Truth-in-Lending (TIL).
2. Expanded Covered Loan: TIL disclosure is required for all loans secured by a dwelling (including non-owner occupied homes) and is not limited to just purchase money transactions.
3. Expanded Timing Requirement: Loan closings must be a minimum of seven (7) business days after the early TIL disclosures have been provided.
4. Re-disclosure Requirement: Should the Annual Percentage Rate (APR) change occur that makes the APR from the early disclosures inaccurate beyond a certain tolerance, then a new disclosure with the revised APR must be provided.  Along with the new disclosure, a loan must wait an additional 3 days from when the disclosure was provided before it can close.
5. New Notice Requirement: There has been new language added in the disclosures for the Fed Box: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

I will be doing some subsection posts on these topics, as there is more to them than just these short descriptions that have been provided.  If these new laws are not adhered to, then a closing that was to take place on a certain date will have to be postponed causing a seller to have to postpone their plans of what could have been a simultaneous closing.  And you can see the snowball effect that this will cause.

Let’s start with the biggest issue that will affect lenders to greatest degree.  By the end of the year, all loan originators will be required to be licensed by the State of Florida.  This means that going to the bank and sitting down with the account executive to apply for you new mortgage loan (whether it be a purchase or refinance) will be a thing of the past.

Now, you are probably going to have to make an appointment with a mortgage specialist that is licensed by the state to come in apply.  So much for convenience…  And then, add on to the fact that this one person is not only responsible for your mortgage loan application, but everyone else that has applied.  In a few days time, this person will be spending more time on the phone dealing with issues then with applications.  Yes, there will be a support team behind this person, but those that are used to dealing with the bank are also used to the customer service that they get by dealing with their account executive.

When is this non-sense going to end.  Now do not get me wrong, I would love for people to leave their bank to come us Knightlines.  After all, 9 times out of 10 our rates are better.   Our closing costs are comparable.  And we can give the attention to detail customer service.  But I do not want it because the government is forcing people to have to seek alternate means.   Whether it be a direct intention or an indirect one, like this.

If the government is going to interfere, I would rather be for the person that has a 750 credit, 10% debt-to-income ratio, and 20% down payment and cannot get a mortgage loan because of a mortgage late in the past year due to losing his job, which has been replaced with a better, higher paying job.  This is what needs to be fixed and looked, not a matter of licensing when they are already under the license of the lender.

And this one change is not even the worst of it.  Stay tuned for more updates that have or will go into effect by the end of this year.

The $30 million is split amongst the counties of Florida.  Each county then distributes the money based on city/area.  In most areas, this will mean that less than 10 first time homebuyers in any given city/area will receive an advance on their $8000 tax credit to use towards the purchase of a new home today.

If you are one of the lucky few to get the $8000 advance to use towards down payment, mortgage loan closing costs, or pre-pays associated with the purchase, here is what you need to know:

1. First-time home buyers this year are eligible for a federal income tax credit of up to $8,000 if their income generally is $75,000 or less for single taxpayers and $150,000 for married couples.
2. Anyone who hasn’t purchased a home in the past three years qualifies as a first-time home buyer.
3. Rather than let home buyers wait until 2009 tax returns are filed next April, Florida legislators decided to advance the $8,000 in an interest-free loan.
4. Buyers have to agree to file for the tax credit and to repay the money within 18 months.

To find out more about FHOP or to stake your claim for the $8000, contact your local SHIP office.  Click here to find your local SHIP office.  Oh, and one more thing, even though the program officially started on July 1, 2009, the cash is not there yet to make the loans to home buyers.

Should you not get the $8000 tax credit advance loan, do not worry.  100% USDA Guarantee Mortgage Loans are still in place and are still funding.  And 97% HomePath is still going strong.  Compare these two loans side-by-side.

Homeowners that are currently struggling to make their payments, but are not yet behind now have relief.  They can refinance their home through FNMA’s Home Affordable Modification set to roll out in April.  Foreclosures will be temporarily suspended while this and other options are looked into; however, if these are not viable solutions, then the foreclosure will continue.

Lenders are encourage to lower interest rates to where a homeowners monthly mortgage payment (principal, interest, taxes, and insurance) are less than 38% but greater than 31% of their monthly gross income.  If a drop in interest rate is not enough to get to this limit, then a the loan term shall be increased to 40 years.  If this is still not doable, then the lender can forbear principal.  And should a lender choose, it can forgive principal.

Any rate changes are valid for a period of five years.  After the fifth year, the rate shall increase up to 1% per year until the interest rate cap is reached.  There is a whole detailed explanation on the rate cap that I will not get into at this time, but the cap is fair.

Mortgage insurance may not be required for these transactions that may now exceed 80% loan-to-value.  The decision is based on the overall strength of the loan being refinanced/modified.  Home values will be based on either a Automated Valuation Model (AVM) or a Broker Price Opinion (BPO).  In other words, no appraisal.

Over the course of the next couple days, I will be putting more information up about this plan and program, as there is many variable surrounding it.  In the meantime, feel free to click here and download the program guidelines for your own reading.

Here is a quick video to help explain those posts:

Homeowner Affordability and Stability Plan

Executive Summary

The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country.

• Millions of responsible families who make their monthly payments and fulfill their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates.

• Millions of workers have lost their jobs or had their hours cut back, are now struggling to stay current on their mortgage payments – with nearly 6 million households facing possible foreclosure.

• Neighborhoods are struggling, as each foreclosed home reduces nearby property values by as much as 9 percent.

The Homeowner Affordability and Stability Plan is part of the President’s broad, comprehensive strategy to get the economy back on track.  The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs. The key components of the Homeowner Affordability and Stability Plan are:

1. Affordability:  Provide Access to Low-Cost Refinancing for Responsible Homeowners Suffering From Falling Home Prices

• Enabling Up to 4 to 5 Million Responsible Homeowners to Refinance: Mortgage rates are currently at historically low levels, providing homeowners with the opportunity to reduce their monthly payments by refinancing. But under current rules, most families who owe more than 80 percent of the value of their homes have a difficult time refinancing. Yet millions of responsible homeowners who put money down and made their mortgage payments on time have – through no fault of their own – seen the value of their homes drop low enough to make them unable to access these lower rates. As a result, the Obama Administration is announcing a new program that will help as many as 4 to 5 million responsible homeowners who took out conforming loans owned or guaranteed by Fannie Mae or Freddie Mac to refinance through those two institutions.

• Reducing Monthly Payments: For many families, a low-cost refinancing could reduce mortgage payments by thousands of dollars per year:

• • Consider a family that took out a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has about $200,000 remaining on their mortgage, but the value of that home has fallen 15 percent to $221,000 – making them ineligible for today’s low interest rates that now generally require the borrower to have 20 percent home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300.

2. Stability:  Create A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners

• Helping Hard-Pressed Homeowners Stay in their Homes: This initiative is intended to reach millions of responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly. Millions of hard-working families have seen their mortgage payments rise to 40 or even 50 percent of their monthly income – particularly those who received subprime and exotic loans with exploding terms and hidden fees. The Homeowner Stability Initiative helps those who commit to make reasonable monthly mortgage payments to stay in their homes – providing families with security and neighborhoods with stability.

• No Aid for Speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home – it will not aid speculators or house flippers.

• Protecting Neighborhoods: This plan will also help to stabilize home prices for all homeowners in a neighborhood. When a home goes into foreclosure, the entire neighborhood is hurt. The average homeowner could see his or her home value stabilized against declines in price by as much as $6,000 relative to what it would otherwise be absent the Homeowner Stability Initiative.

• Providing Support for Responsible Homeowners: Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments.

• Providing Loan Modifications to Bring Monthly Payments to Sustainable Levels: The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. Using money allocated under the Financial Stability Plan and the full strength of Fannie Mae and Freddie Mac, this program has several key components:

• • A Shared Effort to Reduce Monthly Payments:For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.

• • “Pay for Success” Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive “pay for success” fees – awarded monthly as long as the borrower stays current on the loan – of up to $1,000 each year for three years.

• • Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

• • Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.

• • Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration — together with the FDIC — has developed an innovative partial guarantee initiative. The insurance fund – to be created by the Treasury Department at a size of up to $10 billion – will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index.

• Institute Clear and Consistent Guidelines for Loan Modifications: Treasury will develop uniform guidance for loan modifications across the mortgage industry, working closely with the bank agencies and building on the FDIC’s pioneering work. The Guidelines will be used for the Administration’s new foreclosure prevention plan. Moreover, all financial institutions receiving Financial Stability Plan financial assistance going forward will be required to implement loan modification plans consistent with Treasury Guidance. Fannie Mae and Freddie Mac will use these guidelines for loans that they own or guarantee, and the Administration will work with regulators and other federal and state agencies to implement these guidelines across the entire mortgage market. The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans’ Affairs and the Department of Agriculture.

• Other Comprehensive Measures to Reduce Foreclosure and Strengthen Communities

• • Require Strong Oversight, Reporting and Quarterly Meetings with Treasury, the FDIC, the Federal Reserve and HUD to Monitor Performance

• • Allow Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options

• • Provide $1.5 Billion in Relocation and Other Forms of Assistance to Renters Displaced by Foreclosure and $2 Billion in Neighborhood Stabilization Funds

• • Improve the Flexibility of Hope for Homeowners and Other FHA Programs to Modify and Refinance At-Risk Borrowers

3. Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac:

• Ensuring Strength and Security of the Mortgage Market: Today, using funds already authorized in 2008 by Congress for this purpose, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability.

• • Provide Forward-Looking Confidence: The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.

• • Treasury is increasing its Preferred Stock Purchase Agreements to $200 billion each from their original level of $100 billion each.

• Promoting Stability and Liquidity: In addition, the Treasury Department will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace.

• Increasing The Size of Mortgage Portfolios: To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSEs’ retained mortgage portfolios allowed under the agreements – by $50 billion to $900 billion – along with corresponding increases in the allowable debt outstanding.

• Support State Housing Finance Agencies: The Administration will work with Fannie Mae and Freddie Mac to support state housing finance agencies in serving homebuyers.

• No EESA or Financial Stability Plan Money: The $200 billion in funding commitments are being made under the Housing and Economic Recovery Act and do not use any money from the Financial Stability Plan or Emergency Economic Stabilization Act/TARP.

Here are some of the key points:

• Allow homeowners that are currently 80% or greater in debt to the value of their home to refinance through Fannie Mae or Freddie Mac

• Lower monthly payments by reducing the interest rate to where the payments represent 38% of their total monthly income.  In addition, the plan would match dollar-for-dollar any monthly savings from the interest payments bringing the effective ratio to closer to 31%.

• In addition to lowering rates, lenders may reduce the principal loan amount down.

• Lenders and servicers will paid incentives to do these modifications before a homeowner misses a payment.

• Establish consistent guidelines across the board for Fannie Mae and Freddie Mac on all modifications.

• Rebuild confidence in the two mortgage giants and increase their portfolio limits.

Now, there are some draw backs to this plan.  Some are addressed and some are not.  The first draw back being that the low interest that one gets today under the modification will only last for 5 Years.  After the initial term is up, the interest rate will be slowly raised back up to the original rate.  The problem with this is that home values could continue to decline or not increase enough to where the homeowner can refinance.  The other issue is that the job market could still be a huge factor to where they cannot afford the increased payments again.

Another issue it that of Mortgage Insurance.  This is the insurance that lenders require a borrower to pay for any loan that is greater than 80% the value of the home.  With the current plan, some homeowners could have new modified loans that are at 105% .  There is no mention in the plan that mortgage insurance be waived.  Now, they did say that the monthly mortgage payment must be below 38%.  Typically, this means PITI(MI) – Principal, Interest, Taxes, Insurance, Mortgage Insurance.  So maybe they are factoring that in, but what happens in 5 years.  Now they start raising the rate again back to its original rate, but this time your payment might have MI added into it.  This could cause huge payment shock to homeowners, which is what really got us to where we are today.

And then there is the double whammy issue of taxes and insurance.  Many areas that have the highest foreclosure rates also saw the highest increase in taxes and insurance.  The spike in these payments (which are often part of the monthly mortgage payment – PITI) created payment shock for home buyers often after the first year when property taxes were re-assessed.  This plan does nothing to address these issues.  States can continue their practice of charging and collecting property taxes without regard to decreasing property values if they choose.  And insurance companies can continue to increase their annual premiums.  The plan proposal should really include these two key factors that helped lead homeowners into their current situation.

There are many more issues surrounding this plan, some good and some bad.  In the end, we all hope that this plan will be the one to stop our current housing and mortgage industries decline.  If it cannot stop it, then may it at least stall the decline enough to where confidence has a chance to catch up.

To read more about the plan, visit the Homeonwer Affordability and Stability Plan fact sheet.

Your Money at Work from White House on Vimeo.

Your comments are always welcome, but please keep the partisan stupidity to a minimum.

The stimulus package gives first-time home buyers an $8,000 tax credit, which unlike last years $7,500 credit does not have to be repaid provided you do not sell your home within 3 years.  There are two catches to the credit: 1) You must purchase the home between January 1 and December 1 of 2009. 2) Your Adjusted Gross Income filings must be less than $75,000 for individuals and $150,000 for married couples.

Want to know what other provisions are in there without reading the whole 1,000+ page document and how they will affect you?  Read here…