FHA Upfront and Monthly MIP Changes

In our commitment to continue to give you more ways to close, we have started a The Davidson Group (TDG) Mortgage Tube audio/video on the 22 ways that FHA allows funds to close. Visit us for detailed explanations http://www.youtube.com/watch?v=LuZWzgLe1DM (for Part 1) Stay tune for Part 2 on Monday HUD Upfront MIP and monthly Mortgage Insurance- Important Changes ...Again HUD has announced this week their 1 year Moratorium on Risk-Based Premiums to go into effect on all New Case Number Assignment dated on October 1, 2008 through September 30, 2009. · Prior to July 14, 2008- All FHA loans had an upfront of 1.50 and a monthly MIP of .50 regardless of the down payment and credit score. · After July 14 (until October 1, 2008): 30/25/20 Year Fixed Credit Scores 680-850 640-679 600-639 560-599* 500-559* 300-499* No FICO score = 90.00 (10% or more down) 1.25/.50 1.25/.50 1.25/.50 1.50/.50 1.75/.50 1.75/.50 1.50/.50 90.01- 95.00 (9.99- 5.00 down) 1.25/.50 1.25/.50 1.50/.50 1.75/.50 2.00/.50 n/a 1.75/.50 >95 (4.99-2.25 down) 1.25/.55 1.50/.55 1.75/.55 2.00/.55 2.25**/.55 n/a 2.00/.55 15/10 Year Fixed Credit Scores 680-850 640-679 600-639 560-599* 500-559* 300-499* No FICO score = 90.00 (10% or more down) 1.00/.00 1.00/.00 1.25/.00 1.50/.00 1.75/.00 1.75/.00 1.50/.00 90.01- 95.00 (9.99- 5.00 down) 1.00/.25 1.25/.25 1.50/.25 1.75/.25 2.00/.25 n/a 1.75/.25 >95 (4.99-2.25 down) 1.25/.25 1.50/.25 1.75/.25 2.00/.25 2.00/.25 n/a 2.00/.25 MOST UPDATED CHANGES ANNOUNCED THIS WEEK: · From October 1, 2008 through September 30, 2009 Upfront MIP: Ø Purchase Money Mortgage and Full Credit Qualifying Refinance = 1.75% Ø Streamline Refinance (all types) = 1.50% Ø FHASecure (Delinquent Mortgages) = 3.0% Monthly MIP: Ø Purchase Money Mortgage, Full Credit Qualifying Refinance, & Streamline Refinance = · 30 years < 95% =.50 (5% of more down) · 30 years LTV >95% = .55 (less than 5% down) · <15yrs LTV < 90% = None (10% or more down) · <15>90% = .25 (less than 10% down) These changes are not huge, but it is important that you are in the know. As you know, we ARE the FHA experts. When we can be of assistance to you and your FHA buyers, please call us at 972-278-3400. Top 7 Tips for Writing Real Estate Ads http://top7business.com/?id=3741 As realtors, a routine part of your job is to write ad copy for newspapers, brochures and internet sites. I came across this great article this week (see link above) and thought that you may want to read it. I hope that you find it beneficial.

Fewer Loans, But Still More Fraud

Interesting Article- You would think we would have learned our leasons by now. Fewer Loans, But Still More Fraud By Kenneth R. HarneySaturday, August 30, 2008; F01 You might assume that with home purchases and new mortgage volume off by 30 percent or more in many markets in the past year, loan fraud would be down as well. Wrong. A benchmark quarterly study released this week by the mortgage industry's principal compiler of fraud reports, the Mortgage Asset Research Institute, found that the number of cases jumped 42 percent between the second quarter of 2007 and the same period this year. They ranged from hoked-up income verifications and credit reports to falsified employment records, financial assets illegally "rented" to buyers to beef up their loan applications, inflated appraisals, straw-buyer scams, and a wide variety of hanky-panky schemes among sellers and purchasers aimed at fooling lenders. The highest numbers of fraud reports in the second quarter came from Florida, California, Maryland, Illinois and Michigan. Tough market conditions appear to actually increase pressures to commit fraud, says Merle D. Sharick, vice president of the research institute. "Mortgage fraud used to be a crime of opportunity," he said. "Now it's a crime of necessity for people who are desperate to maintain lifestyles they became accustomed to" during the housing boom years. The Internet is a key facilitator of their activities, Sharick said, with dozens of Web sites hawking fake income and employment verifications, tax filings, credit scores, deposit verifications and other forms of deception. Some individuals have begun using free advertising services such as Craigslist to promote their wares, such as bank deposits that are available to home loan applicants to claim as their own on mortgage applications. In fact, the deposits remain in the control of the scammers; only the account identification is changed for a short time. One Web promoter recently blitzed loan officers with e-mails touting "pay stub and job verifications -- show the income you need on paper." Recipients were directed to submit requests by text message. A Web site address also was listed but was not functional when I tried it in late August. A scam that recently popped up online involved promoters trolling the Web for "straw buyers" -- people with good credit scores and incomes who would rent their names and asset verifications for home purchases by unqualified buyers. In one case, said Sharick, straw buyers were offered $7,500 per transaction for their financial identities. Legal title subsequently was transferred from the straw buyer to the actual purchasers, who otherwise would have been rejected by the lender. The straw buyers later could claim identity theft. Web-based crooks tend to be nimble, creative and technically savvy. The Mortgage Asset Research Institute and private lenders may flag online vendors to the FBI or state financial crimes investigators. But by the time they focus in on the site, the sponsors often have covered their tracks electronically and moved on to new addresses and new pitches. Some vendors try to skate to the edge of the law, selling pay stubs and employment verifications, or the software to manufacture them in bold print, while in fine print disclaiming any connection with improper uses of the documents or software. One site characterized its pay stubs as "novelty" products. "Although these stubs are authentic looking and will FOOL ANYONE -- EVERYTIME," said the site, the pay-stub software being sold is "not intended to be used to acquire a mortgage" or other types of loans. At the other end of the spectrum, low-tech records systems maintained by some counties sometimes allow scam perpetrators to file fake documents that give them effective control of properties, at least temporarily, according to Sharick. "There are 3,800 county courthouses out there," he said, many of them with outdated systems, low budgets and staff, and minimal defenses against sophisticated con artists. "For a $10 filing fee, nine out of 10 times [in those counties], they'll file whatever you want." For example, a faked lien release from a bank or mortgage company indicating that the debt against a property has been paid and that there is no further lien against the house. That, in turn, opens the door for criminals to load large amounts of new mortgage debt against the property with fake identities, or even to sell it for cash. Other scam artists have begun hijacking the identities of law-abiding professionals -- appraisers, in particular -- and then submitting bloated valuations designed to squeeze higher mortgages out of lenders. One bank flagged an appraiser on nine inflated valuations in its portfolio, according to Sharick. But even though the letterhead and documentation were identical to the appraiser's, he had not performed any of the appraisals. It appeared that the scammers had scammed him as well as the bank.

FHA 1 Year Moratorium on Risk Based Premiums

HUD has announced their 1 year Moratorium on Risk-Based Premiums to go into effect on all New Case Number Assignment dated on October 1, 2008 through September 30, 2009. The Moratorium has changed the Up-front MIP as follow: Ø Purchase Money Mortgage and Full Credit Qualifying Refinance = 1.75% Ø Streamline Refinance (all types) = 1.50% Ø FHASecure (Delinquent Mortgages) = 3.0% The Moratorium has change the Monthly MIP as follow: Ø Purchase Money Mortgage, Full Credit Qualifying Refinance, & Streamline Refinance = · >15 yrs LTV < 95% =.50 · >15yrs LTV >95% = .55 · <15yrs LTV < 90% = None · <15>90% = .25 Ø FHA Secure = · LTV < 95% = .50 · LTV > 95% = .55 For further information, please contact us at 972-278-3400. Linda

Appraisers Still Feeling Pressure

From: TAMB [mailto:TAMB@tamb.org] Sent: Friday, August 22, 2008 5:00 PMTo: TAMB@TAMB.orgSubject: Ken Harney's Saturday Article Appraisers, Still Feeling Pressure By Kenneth R. HarneySaturday, August 23, 2008; F01 Have the real estate valuation shenanigans and inflated home appraisals that characterized the boom years disappeared? Or are mortgage loan officers and real estate agents -- even individual home sellers -- attempting to influence or interfere with appraisals despite new federal rules that ban such behavior? Ask appraisers, and many will tell you: It's still business as usual. Attempts to encourage inflated appraisals continue, although in some cases, the techniques have become subtler. "Absolutely, appraisers continue to get pressured" to hit the numbers needed to push transactions to closing, said Bill Garber, government affairs director for the Appraisal Institute, a professional organization representing appraisers. "That has not changed yet," he said, even though recent federal housing legislation toughens appraisal standards and the Federal Reserve's new truth-in-lending rules ban interference, bribes or intimidation designed to influence appraisers' valuations. A national poll of appraisers, conducted by October Research two years ago, found that 90 percent of those interviewed reported some form of interference or intimidation by retail loan officers, brokers, third-party appraisal management firms and others. Gary Crabtree, principal of Affiliated Appraisers in Bakersfield, Calif., said, "It hasn't gone away." There are even some developments that could make things worse, he said. Starting Oct. 1, a new federal foreclosure-relief refinancing program requires lenders to write down the value of distressed houses to 90 percent of current market value to enable borrowers to be refinanced. Some appraisers "could find themselves under pressure to inflate values" on those properties to cut lenders' losses, Crabtree said, even though the federal legislation authorizing the program specifically prohibits interference. Sara F. Schwarzentraub, president of Inter-State Appraisal Service of La Mesa, Calif., recalls how one client left a recorded message on her office phone complaining, "If you didn't know you could hit what was needed, you shouldn't have taken the assignment." The number needed by the caller -- a mortgage company employee -- was $50,000 to $60,000 higher than comparable values in the area could support, according to Schwarzentraub. In Owings, Md., Michael Tsourounis, president of Calvert Appraisal and Realty Services, recounted a recent visit to a mortgage company in his area. Tsourounis inquired about the possibility of doing appraisal work for the lender. "The office manager asked me directly: 'If I sent you out to appraise a million-dollar home and the comps [comparable sales] only came in at $800,000 . . . but in your heart you knew it was worth a million dollars, what would you bring it in at?' " Tsourounis said he told the manager, "The market is full of million-dollar houses selling for $750,000. Why should I be responsible for adding one more foreclosed property to the already growing list?" "Not surprisingly," he said, he has never heard back from the lender. "Was that a form of interference? You bet it was," Tsourounis said. "It was just a little subtler, a little less direct, than it used to be." The obvious intent, according to Frank Gregoire, immediate past chairman of the Florida Real Estate Appraisal Board and an appraiser in the Tampa-St. Petersburg area, "is really to find out: Will this guy play ball? Will he be cooperative when we need him?" Gregoire says appraisers still routinely receive probing e-mails and phone calls from lenders and brokers designed to elicit the same information: Will an appraiser "pre-comp" a property with a sales contract pending at a specific price? Can that appraiser reach a specific valuation number needed for a refinancing -- which may be far out of line with current local property values? He said, "Things are tough, sales volumes are down, and some lenders know that they'll eventually find someone who'll cooperate" -- often a newcomer to the appraisal field who badly needs an assignment. "It's not easy for some of them to say no, especially when they see business go to folks who everybody knows are playing the game." Only when federal and state governments severely punish unethical appraisers and the people who put pressure on them "will all this start to get under control," Gregoire said. But he sees some reasons for optimism: State regulators in Florida and elsewhere are increasingly cracking down on appraisers, even stripping away their licenses. And the new federal legislation authorizes the housing secretary to impose financial penalties when appraisers are found to have inflated values.

Quick Reference Guide To the $7500 Tax Credit and FAQs Interesting Talking Points

Click HERE if you are having trouble viewing the card Quick Reference Guide To the $7500 Tax Credit and FAQs; Interesting Talking Points This week has been economically a little slow..... it seems to be the calm before the storm (stay tuned......). Have a great weekend. When we can be of assistance to you, please don't hesitate to contact us at 972-28-3400. Linda Quick Reference to the $7500 Tax Credit. If you would like this in a "customizable" word document, send us an email and we will be glad to send it to you. Great information to let your clients know! Also for a great FAQ, go to http://www.realtor.org/gapublic.nsf/files/hbtaxcreditqa2008.pdf/$FILE/hbtaxcreditqa2008.pdf Feature H.R. 3221 Housing and Economic Recovery Act of 2008 Amount of Credit Ten Percent of the cost of home, not to exceed $7500. Examples: Ø If a home costs $65,000, the allowable credit would be $6,500. Ø If a home costs $120,000, then the allowable credit would be $7,500. Eligible Property Any single-family residence (including condos) that will be used as a primary residence. Refundable Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year. Individuals should consult a professional tax advisor for exact tax calculations. Examples: Ø If an individual's actual tax liability was $5,000, then after the tax credit is applied the purchaser would receive a total refund of $2,500. The refundable amount is the difference between the $7,500 tax credit and the amount of one's tax liability. Ø If an individual's actual tax refund was $2,000, then after the tax credit is applied the purchaser would receive a total refund of $9,500. Income Limit Individuals whose Form 1040 filing status is single (or head of household) are eligible for the tax credit if their income is no more than $75,000. Individuals who file a joint return may have no more than $150,000 in income. Individuals with incomes between $75,001 and 94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit. Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit. First-time Homebuyer Only Purchaser (and purchaser's spouse) may not have owned a principal residence in three years previous to purchase. Recapture A portion (6.67% of credit) is to be repaid each year for 15 years. If home is sold before 15 years, then remainder of credit is due in the year of the sale. Ø If a homebuyer claims the $7,500 credit in 2009 on their federal income tax return for a closing that occurred in 2008, then the credit is received in 2009, so repayment begins in 2010 with an annual repayment amount of approximately $500 a year. Ø If the homeowner dies, their heirs do not have to pay back the remaining balance. Ø If the house is sold before fifteen years have passed and the home's appreciation is less than the amount needed to be to paid back, the loan is forgiven. Ø If the home is turned into a rental or investment property, the pay back balance is due in that year. Effective Date Purchases on or after April 9, 2008 until July 1, 2009 Talking Points TAX STAT - The top 1% of US taxpayers is responsible for the payment of 40% of all federal income tax. Ten years ago (1998), the top 1% of taxpayers paid 35% of all federal income tax. Twenty years ago (1988), the top 1% of taxpayers paid 28% of all federal income tax (source: Tax Foundation, IRS). A TRILLION MORE - With just 2 months remaining to be reported in fiscal year 2008 (i.e., 10/01/07 to 9/30/08), the US government is projected to spend $2.9 trillion for the 12-month period. During fiscal year 2001 (i.e., the first fiscal year that ended during President Bush's initial term in office), total government spending was $1.9 trillion (source: Treasury Department). NOT TOTALLY HONEST - The US government believes that sole proprietors, on average, report and pay taxes on only 50% of their annual profits, contributing to an overall estimated $345 billion annual "tax gap," i.e., the difference between what all US taxpayers should have paid in federal income taxes vs. what they actually paid (source: IRS, Barron's). FAST IN THE WATER - When the US men's 4 x 100 meter freestyle relay team (which included American swimming superstar Michael Phelps) won the gold medal last Monday morning, they broke the existing world record by 3.99 seconds. Sweden's team also broke the old world record in the race (by 0.31 seconds) and finished 5th in the race, receiving no medal for their efforts (source: NBC Olympics coverage). Have a blessed weekend. Let us know when we can be of assistance. Linda Linda Davidson, Senior Loan Officer, DE Underwriter Service First Mortgage 972-278-3400 office 972-497-6452 fax 1-866-963-3777 Toll Free www.davidsongroup.net Check out our blog: http://lindadavidsonmortgage.blogspot.com The Davidson Mortgage Group Ranking 6th Nationally in FHA/VA Purchase Units Closed! Ranking 33rd Team in the Nation in Total Purchase Units Closed! Ranking #69th Team in the Industry for Total Units! Voted #1 Area Mortgage Team For The Past 10 Years We ARE The Mortgage Experts! Your Lender for Purchase, Refinances, Reverse Mortgages and Commercial Lending!! P.S. The finest compliment that we can receive is a referral from you . We appreciate your trust! Linda The Home Buying Experts! The Davidson Group Service First MortgageLinda DavidsonOffice: 972-278-3400 Email us at:ldavidson@servicefirstmtg.comVisit our website at:http://www.davidsongroup.net

August 18- Update on FHA DAPS, Hot Dog Party, Training Classes, First Time Home Buyer $$ Available

Important (!) Update on FHA DAPS: As of today, we are hearing that the repeal for the discontinuation of Downpayment Assistance Programs (i.e., programs such as Nehemiah) is loosing any ground that it had and so the possibly of the discontinuation of DAPs is strong. We received word last week from two of the five major FHA servicers in the United States that they will be either discontinuing taking any DAPS after 8/31 and the other one was 9/15. My suggestion is……… if you are needing to go DAP, do not wait until a 9/30 closing….. lets get the loan closed as quickly as possible while we still have the program available in the industry. When we can assist you, please feel free to call us at 972-278-3400. What a great week for USA and Michael Phelps. Go Phelps…. Go USA! One of the things that always comes across my mind when I watch the Olympics is these athletics did not just wake up on morning and say “Hey, today I am going to be very, very good at what I do.” No, it is years of practicing, studying the game, and a personal commitment to be excellent. It always increasing my resolve to be a student and master of my industry as a personal resolve to excellence. Friday, 8/29 11:30-1:00 Celebrating Hot Dog Month (August) and Saying Thank YOU Eating J and everyone is welcome. Free food, drinks, drawings, fun. Come join us! It is our Annual Hot Dog Celebration! Service First Mortgage 3200 Broadway Blvd Garland, TX 75043 (Back Lot) No- Just come hungry! Friday, 9/5 9:00-11:00 AM Appraisals- The Past, The Present and The Future Also… New Bonus Class on "Lower the Rate...Not the Price- A seller buy down strategy! Learn the new guidelines for appraisals as well as the major changes that will occur 1/1/09. Taught by Chris Smith, Appraiser Linda will be teaching the New Bonus Class on a great strategy to make YOUR listings sell quicker! North American Title 5435 N Garland Rd #180 Garland, TX 75040 214-703-9607 (North Garland and 190) Yes- Please call 972-278-3400 or email to ldavidson@servicefirstmtg.com by 9/2. Space is limited. Wednesday, 9/10 9:00-11:00 AM The New and Improved FHA and Learning to Work Short Sales (When is Too Late, Too Late) Two popular classes taught by Linda Davidson. It is important to understand both of these subjects in order to thrive in our current market. Service First Mortgage 3200 Broadway Blvd Garland, TX 75043 Yes- Please call 972-278-3400 or email to ldavidson@servicefirstmtg.com by 9/8. Space is limited. Thursday, 9/18 8:00-9:00 AM H.R. 3221- The Housing Bill that will change our industry Many of these changes occur as of 10/1/08, so it is important that you are in the know. Dickey’s BBQ 5000 Rowlett Rd Ste 100, Rowlett, TX N/A- Rowlett MLS MAP (Enterprise- Dallas First Time Home Buyer Program) has opened up about $1,000,000 in funds. If you are looking in the City of Dallas and household income is not more than $42560(for a family of two) and $53200 (for a family of four), there is $10,000 per transaction that can be used to purchase a home. Note that buyer cannot have own property for the last three years. Give us a call at 972-278-3400. Market Report Last Week in Review "You can't put a limit on anything." Michael Phelps. And while swimmer Michael Phelps has had a record-setting week at the Beijing Olympics, Bonds and home loan rates have been battling some tough opponents at home. Bonds began the week trading lower due to inflation fears after crude shipments from Georgia were halted amid the Russian bombardment of the country. However, some poor economic reports (remember, bad economic news is bad for Stocks and typically causes money to flow from Stocks into Bonds)...including poor earnings reports from Macy's and farm equipment maker Deere & Co....helped Bonds and home loan rates regain some of the early ground they had lost. Bonds continued to rally in the latter part of the week despite the hotter than expected read on consumer inflation in the July Consumer Price Index (CPI) report. According to the index, consumer prices increased 5.6% over the last year, which is the biggest year-over-year increase since January 1991. However, Bonds shrugged off the bad inflation news and traded higher because this hot reading came during the time that oil prices spiked to $147 a barrel in the month of July. Since then, oil prices have dropped significantly and are now $113 a barrel, which left traders thinking that next month's CPI reading may be tamer. And Bonds and home loan rates continued their rally on Friday in response to some tame inflation news within the Empire State Index Report. While inflation has been a tough opponent for Bonds and home loan rates, the technical factor known as the 25-day Moving Average (a moving average is the average closing price of a financial instrument over a given time) has been an even tougher opponent of late. Bonds and home loan rates have attempted to improve past this level several times over the last few weeks, finally succeeding on Friday to end the week nearly unchanged from where they began. PUTTING A LIMIT ON OVER-CONSUMPTION IS AN IMPORTANT THING TO DO! CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW TO LEARN HOW GOING GREEN CAN MAKE A DIFFERNCE NOT JUST FOR THE WORLD, BUT FOR YOUR MORTGAGE, TOO! Forecast for the Week Tuesday is an especially important day to stay tuned to the markets as two reports...the wholesale inflation measuring Producer Price Index and the state of the housing market measuring Housing Starts and Building Permits Report...could impact the direction of Bonds and home loan rates. Thursday is another important day to note as the Philadelphia Fed Report will be released. This monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports. If manufacturing is stronger than expected in this area, Stocks could move higher at the expense of Bonds and Home Loan Rates. Remember when Bond prices move higher, home loan rates move lower...and vice versa. Bonds and home loan rates were able to battle back and end the week near where they started. However, a new level of resistance at the 50-day Moving Average (seen as the solid Black Line) may have an affect on the direction of home loan rates. I will be watching to see whether Bonds and home loan rates can beat out their next opponent to reach even better levels. The Mortgage Market View... Green Mortgages Equal Larger Loans and Efficient Homes Tired of heat and energy prices skyrocketing out of your budget? Now you can do something about it...and your mortgage can help! Energy-efficient improvements, such as installing double-paned windows and additional ceiling insulation, can save you money every month, not to mention pay for themselves in the long run. But how do you come up with the cash to pay for those projects up front or to buy a slightly more expensive house that already has them? One way is with a "green mortgage." What is a Green Mortgage? Green mortgages actually come in a couple of different formats. Officially these loans are classified as either Energy Efficient Mortgages (EEMs) or Energy Improvement Mortgages (EIMs). An Energy Efficient Mortgage essentially allows you to purchase a home that is already energy efficient - even if the price of that home is larger than you would normally qualify for under your debt-to-income ratio. Energy Improvement Mortgages, on the other hand, allow you to take out a larger loan to make energy efficient repairs and improvements to a house that is not currently rated as energy efficient. The main benefit of both of these mortgages is that they help you to qualify for a larger loan amount and help make it possible for you to live in a better, more energy-efficient home. The basic principle behind this type of financing is that the money you save from the more efficient home will offset the larger mortgage payments. Qualifying for a Green Mortgage To qualify for a green mortgage, you typically need to have a Home Energy Rating conducted. This rating provides the lender with an Energy Savings Value, which is the estimated monthly energy savings and the value of the energy efficiency measures. Depending on your unique circumstances, you may qualify for a conventional, FHA, or even a VA green mortgage. Each type of loan is designed to fit specific situations and, therefore, each loan has specific requirements that must be met. You can learn more about the differences between conventional, FHA, and VA green mortgages at the Energy Star website. And for more details about green mortgages in general, visit the HUD website. Whether you're looking to add energy-efficient improvements to your current home or want to purchase a new energy-efficient house, green mortgages offer benefits that are definitely worth looking into. Call today to discuss your options in more detail. Have a blessed week. When we can be of assistance to you, please don’t hesitate to contact us at 972-278-3400. Linda Linda Davidson, Senior Loan Officer, DE Underwriter Service First Mortgage 972-278-3400 office 972-497-6452 fax 1-866-963-3777 Toll Free http://www.davidsongroup.net/ Check out our blog: http://lindadavidsonmortgage.blogspot.com/ The Davidson Mortgage Group Ranking 6th Nationally in FHA/VA Purchase Units Closed! Ranking 33rd Team in the Nation in Total Purchase Units Closed! Ranking #69th Team in the Industry for Total Units! Voted #1 Area Mortgage Team For The Past 10 Years We ARE The Home Buying Experts! Your Lender for Purchase, Refinances, Reverse Mortgages and Commercial Lending!! P.S. The finest compliment that we can receive is a referral from you . We appreciate your trust! Linda

August 15- New Fannie/Freddie Risk Based Pricing

Great article on the New Fannie/Freddie Risk Based Pricing effective November 1, 2008 Winners and Losers As Loan Fees Change By Kenneth R. HarneySaturday, August 16, 2008; The two biggest sources of mortgages for American home buyers plan to raise their base fees to counter what they call continuing "adverse conditions" in the real estate market. At the same time, Fannie Mae and Freddie Mac, which fund more than three-quarters of all new home loans, also plan to selectively reduce fees for certain applicants whose likelihood of default and foreclosure appear to be lower than the companies' previous estimates. The changes are being driven by what's known as risk-based pricing. Factors such as credit scores, the size of the down payment and the type of loan can push expenses on a new mortgage up or down significantly -- costing or saving a borrower tens of thousands of dollars over the term of the loan. Here's what's happening: As of Nov. 1 for new mortgages delivered to Fannie Mae, and Nov. 7 for those delivered to Freddie Mac, baseline "adverse market" fees will be doubled, to 0.5 percent -- from $250 per $100,000 borrowed to $500 per $100,000 borrowed. That applies to all home purchasers and refinancers, irrespective of their individual risk characteristics. The higher fees either will be paid up front by borrowers or will be folded into the interest rate on the notes, adding about an eighth of a point. Although the formal start dates for the higher fees are not until fall, major lenders already are incorporating them into their quotes and rate sheets. Neither company announced the jump in fees to the public but instead sent e-mail bulletins to their lender partners. On the flip side of the higher baseline costs is a series of risk-based pricing changes keyed to borrowers' scores and down payments. Both companies plan to reduce fees for borrowers with high FICO credit scores -- 720 and up -- who make down payments of less than 15 percent. These borrowers will be quoted credits of one-quarter of a percentage point, amounting to cuts in their fees, at the application stage. At the same time, borrowers with FICO scores below 720 and down payments of less than 15 percent will be charged quarter-point higher fees upfront. Why? Credit scores never have been more powerful in determining the rates and fees borrowers pay. Even more important, credit-score standards are being ratcheted up dramatically. During the housing boom years, the dividing line between subprime applicants and borrowers deserving better rate quotes was a 620 FICO. A 700 score was a virtual guarantee of the best quotes available. Fair Isaac Corp.'s FICO scores range from about 300 -- the highest risk -- to 850, the lowest risk. Now, even FICO scores in the upper 600s or above 700 are subject to higher fees in some cases. For example, if you are applying for a loan destined to be funded by Fannie Mae and you have a 739 FICO score and a down payment of 20 percent to 25 percent, you're likely to be hit with a quarter-point fee increase that you wouldn't have been charged as recently as last month. You might protest. Since when is a FICO of nearly 740 not deserving of the lowest fees? Fannie's implicit answer through its revised risk-based pricing system: Sorry, but a 739 FICO no longer makes the highest grade when the applicant can't make a 30 percent or 40 percent down payment. Worse yet, if you've got a FICO score below 720 and don't have at least a 30 percent down payment, you're going to get hit with a half-percentage-point delivery fee upfront. So why are Fannie Mae and Freddie Mac actually decreasing fess to borrowers with high credit scores who make down payments of less than 15 percent? Isn't that counterintuitive, because default risks rise when down payments are smaller? Yes, but in Fannie Mae and Freddie Mac's world, all loans with 20 percent or smaller down payments require private mortgage insurance to protect the companies from the deepest losses associated with foreclosures. Now both companies have decided that they can charge a little less on such loans because the insurance lowers their risk of serious loss. That's good news for moderate-income first-time buyers with sterling credit who don't have a lot of cash. Not coincidentally, both companies are required by Congress to serve such creditworthy buyers, many of whom have lately been turning to the Federal Housing Administration for lower-cost, low-down-payment mortgage deals.

Why the Olympics is like life/ Updates on the Housing bill that you want to know/ $7500 Tax Credit Article/ Repair $$ available for City of Dallas/ Ta

Why the Olympics is like life/ Updates on the Housing bill that you want to know/ $7500 Tax Credit Article/ Repair $$ available for City of Dallas/ Talking Points Tonight airs the opening ceremonies of the Olympics. I love the Olympics- Heck, I will even admit that I am an Olympic junkie. The main reason that I love the Olympics is because it reminds me that they are about choices -just as life is about choices. These Olympians choose to perfect their game 10-12 hours a day, they choose to not complain about how cold it is (or hot it is) or that they are sore, or tired or just dont feel like working out today. We, in the real estate and mortgage industry, also make choices daily. We can choose to be better every single day in our craft (it is a choice) or we can choose to sit around and complain that we are tired, or the economy is bad, or dont feel like doing our necessary disciplines to get the business in the door daily, etc. Someone is going to win the gold in every event in the Olympics. Someone is going to be the agent or mortgage lender of choice for those buyers that are buying and those sellers that are selling. Why not me- Why not you? So as we celebrate the Olympics for the next two weeks, lets take their example of choices and make great daily choices for our businesses also. Go USA! Linda Just wanted to update you on the HR 3221. Below you will find information on two guideline changes that has not received a lot of attention as well as two that have. We will continue to keep you updated as we know it. Many of you have asked that we update you more, so we are here to make it happen. FROM HR 3221 Cash Investment Assistance and Prohibition of Seller-Funded Down payment Assistance: Requires at least 3.5 percent cash or its equivalent investment by mortgagor. Prohibits seller-funded down payment assistance but allows other down payment sources such as Community Development Block Grants and City and State bonds. Permits amounts borrowed from a family member to be treated as cash or cash equivalent as long as any lien for repayment is subordinate and the total liens do not exceed 100 percent of the value of the property plus appraisal, inspection and other fees. Currently FHA indicates that while the provision appears to be self implementing as of the date enactment, under case law, the effective date is dependent on issuance of FHA guidance. The down payment assistance limitation applies where the mortgagee has issued credit approval for the borrower on or after October 1, 2008. Note, however, the industry may putting a earlier deadline.... Stay tuned. Our sources tell us that the chances of the repeal of DAPS going away have about a 20% chance of passing, so the possibly of DAPS being prohibited after credit approvals of October 1 (or before depending on the industry) are @ 80%. Make certain that you are telling your buyers that need a DAP to purchase now as there is a very, very good possibility that these are gone in less than two months. Nationwide Licensing and Registry System Encourages states, through the Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators (AARMR) to establish a Nationwide Mortgage Licensing System and Registry for residential loan originators. Registry is to accomplish several objectives including establishing means by which residential mortgage loan originators would, "to the greatest extent possible, be required to act in the best interests of the consumer." "States" includes all U.S. states, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands. Coverage: Covers all persons who take residential mortgage loan applications and offer or negotiate mortgage terms except administrative, clerical personnel or those who only perform real estate brokerage activities or who are only involved in extensions of credit relating to time shares. Standards: Establishes minimum standards for licensing and registration as State-licensed loan originators including that they must: never have had an originator license previously revoked; pled guilty or been convicted of a felony during the seven year period prior to licensing or at any time if such felony involved fraud, dishonesty, breach of trust or money laundering; demonstrate financial responsibility, character and general fitness; complete pre-licensing educational requirements; pass a written test; and meet either net worth or a surety bond requirement, or pay into a State fund. Default Licensing and Registration Law: Requires HUD to establish a backup licensing and registry system for the licensing and registration of loan originators for any state that fails to establish a state system within one year from enactment or two years for states where legislatures meet biennially. Federal Regulators: Requires federal banking regulators to jointly establish a registry of loan originators for federally regulated bank and thrift institutions and their subsidiaries. Fingerprints and personal experience information on these originators is to be furnished to the Nationwide Mortgage Licensing System and Registry. Annual Report on Licensing and Registration: Requires HUD to report annually on the effectiveness of licensing and registration provisions. Truth in Lending Act (TILA) amended to expand the mortgage loans subject to early disclosures within three days of application. Also requires disclosure seven days before closing and any correction of an APR three days before closing. Fees: Requires consumers receive early TILA disclosures before paying any fee, except possibly a fee for a credit report. New Statement in Disclosures: Requires a new statement in TILA disclosures involving dwelling-secured transactions: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application." Additional Disclosure Requirements: Requires disclosures to better explain adjustable rate products, through examples, including how monthly payments adjust based on interest rate changes and the maximum payment. Violations: Increases money penalties for violations. Great article on understanding the.... New Tax Credit Amounts To a Free Loan for $7,500 By Kenneth R. HarneySaturday, August 2, 2008; F01 Anyone who has been hesitant about jumping into real estate until conditions settle down should keep in mind these dates: April 9, 2008, through June 30, 2009. They mark the eligibility time span for the home-purchase tax credit created by the new housing bill. If you have not owned a house during the past three years and can go to closing before the end of next June, you may be eligible for up to a $7,500 credit against your federal taxes for 2008 or 2009 ($3,750 if you file taxes as a single person). The new credit is expected to benefit hundreds of thousands of buyers. The specifics of the credit changed in the past month as the Senate and House negotiated a final compromise, so here's a quick overview of the credit in its final form: · The basic idea: To jump-start housing sales and clear out unsold real estate inventories, Congress is offering tax credits to pull in new buyers. Within the designated time period, buy any house -- new, old, any location or condition, any price range -- and the IRS will cut up to $7,500 off your tax bill for either this year or next. For example, if you're an eligible buyer this year and you owe the IRS $4,000 on your total 2008 income tax bill, your $7,500 tax credit could wipe out everything you owe plus get you a $3,500 refund. The new tax credit is what the government calls "refundable": If your tax bill is less than the credit amount, you get the difference back from the Treasury. · Eligibility rules: Do you own a home? If so, you're not eligible for the credit. Did you sell your home more than three years ago and now rent? You are eligible. You're also eligible if you have never owned a home. Close on a house before June 30, and you can claim a credit of up to 10 percent of the purchase price of the property, up to $7,500. If your adjusted gross income exceeds $150,000 ($75,000 if you're single), the credit maximum begins to phase down. You cannot claim the credit if you are a nonresident alien, financed the property using a state or local housing agency's tax-exempt bond mortgage, or do not plan to use the house as your principal residence. Buyers who use the District's first-time-buyer credit program cannot double-dip and use the new federal credit, too. · Payback: Unlike some other tax credits, this one requires beneficiaries to repay the credit. Starting in the second tax year after purchase and continuing for up to 15 years, taxpayers are expected to make pro rata repayments to the government on their federal filings. Over a 15-year payback period for the full $7,500 credit, the cost would be $500 a year. If you sell the house before the end of the repayment period and you have no gain on the sale, you won't be expected to pay the credit back from the proceeds. If you have a net gain, the "recapture" cannot exceed the amount of your gain. In other words, the federal government is taking on all or much of the risk that the value of your new house won't increase over time. At its core, the new tax credit functions very much like an interest-free loan for up to $7,500. You pay only the principal back over time. Rob Dietz, an economist for the National Association of Home Builders, said the new credit not only will pull first-time buyers into the market, but also will have a powerful "multiplier effect" as thousands of sellers of these credit-assisted houses buy replacement homes for themselves, thus extending the impact of the credit into the move-up segment. How do you claim the credit? If you pass the eligibility tests, simply request the credit on your tax return for either 2008 or 2009. Even if you buy in 2009, you can take the credit against your 2008 taxes by filing an amended return. The association has launched an educational Web site, www.federalhousingtaxcredit.com, with additional information for consumers. We will continue to talk about ways to market this to your buyers in the next few weeks. City of Dallas Home Repair Program: $1.2 Million Available for Citywide Home Repairs The City of Dallas Housing Department is accepting loan applications this week for their Home Repair Program. The funds are earmarked for major roofing, electrical, plumbing, gas, heating and air conditioning repairs and lead based paint removal. Available through the U.S .Department of Housing and Urban Development (HUD) Community Development Block Grants, the loans are deferred and require no repayment if the applicant continues to reside in the home for five years. Homeowners whose annual household incomes are at or below 80 percent of the Area Median Family Income, $37,240 to $57,456 depending on household size, may qualify for two major repairs. To be eligible, residents must show proof of ownership for at least two years (six months for special designated areas); citizenship or permanent legal residency; household size; income; paid property taxes; insurance; no more than one property lien and no prior assistance (with some exceptions for emergencies). To request a loan package call (214)670-5397. Talking Points To Your Clients DAY LATE, DOLLAR SHORT - Americans are projected to be assessed $52 million a day in late fees charged by credit card companies during calendar year 2008 (source: R.K. Hammer, USA Today). TIGHT SECURITY - Surveillance cameras (300,000) will outnumber athletes (12,000) by 25-to-1 at the 2008 Summer Olympic Games that begin Friday (8/08/08) in Beijing, China (source: Financial Times, USA Today). Have a blessed weekend. When we can be of assistance to you and your buyers, call us at 972-278-3400. We look forward to hearing from you. Linda Linda Davidson, Senior Loan Officer, DE Underwriter Service First Mortgage 972-278-3400 office 972-497-6452 fax 1-866-963-3777 Toll Free www.davidsongroup.net The Davidson Mortgage Group Ranking 6th Nationally in FHA/VA Purchase Units Closed! Ranking 33rd Team in the Nation in Total Purchase Units Closed! Ranking #69th Team in the Industry for Total Units! Voted #1 Area Mortgage Team For The Past 10 Years We ARE The Home Buying Experts! Your Lender for Purchase, Refinances, Reverse Mortgages and Commercial Lending!! P.S. The finest compliment that we can receive is a referral from you . We appreciate your trust! Linda The Home Buying Experts! The Davidson Group Service First MortgageLinda DavidsonOffice: 972-278-3400 Email us at:ldavidson@servicefirstmtg.comVisit our website at:http://www.davidsongroup.net

August 14 2008- FHA Funds to Close Reference Guide, Bonds Persevere And Go For Gold

• FHA Funds to Close Reference Guide, Bonds Persevere And Go For Gold Go USA! If you want to start your day with an amazing "come back", watch the Mens Swimming Relay from last night http://www.nbcolympics.com/video/player.html?assetid=0811_hd_swb_hl_l0194&channelcode=sportsw&GT1=39001. It will take your breath away! Go USA! Important FHA Reference Guide for Funds To Close With DAPS (Down payment Assistance Programs like Nehemiah) going away* and the increased requirement of 3.5% buyer contribution (date pending upon the mortgagee letter), I have created a 5-page list of the FHA guidelines of the multiple ways (did you know that there are 22 ways!) that a buyer can obtain their FUNDS TO CLOSE for FHA loans. I tried to make it an attachment to this email but was having technical difficulty so if you would like a copy, please email us at (ldavidson@servicefirstmtg.com) or call us at 972-278-3400 and we will be glad to send it to you. This knowledge is going to continue to be vital for our buyers so we wanted to make this available to you. *Our sources tell us that there is only a 20% chance that the DAPS discontinuation will be repealed so as far as we know right now they have been discontinued by 10/1/08. Please be aware that some of these FHA guidelines may have additional investor and industry restrictions so it is vital that verification is made up front prior to any action taken. We ARE the FHA Experts..... As we have said before (and will continue to say), don't let others practice on your buyers...... Let us be your FHA/VA and USDA Lender of Choice. We can be reached at 972-278-3400. Market Report Last Week in Review "PERSEVERANCE IS A GREAT ELEMENT OF SUCCESS." Henry Wadsworth Longfellow. Despite strong opposing forces in the early part of the week, Bonds and home loan rates persevered like the greatest Olympian athletes, and were able to end the week in a similar position to where they began. Remembering that inflation is the arch-enemy of Bonds and home loan rates, bad news on the inflation front caused Bonds and home loan rates to worsen Monday as the Personal Consumption Expenditure Index indicated that inflation climbed 0.8% in June, the highest monthly jump in 27 years. Not a huge surprise, given how energy and commodity prices soared in June. Despite these inflationary pressures, the Fed announced on Tuesday that they have decided to keep the Fed Funds Rate at 2%, and released a statement that hinted they may not raise the Fed Funds Rate in the near future. Why did the Fed do this? The Fed is trying to balance a slowing economy and the threat of inflation, and while raising rates could help fight inflation, it could also slow the economy even more than it is now. The Fed is hoping that keeping the Fed Funds Rate unchanged will help boost the economy, without fanning the fires of inflation. Since this decision kept the fears of inflation strong, Bonds and home loan rates worsened as a result. However, Bonds and home loan rates persevered and managed to rally like champions later in the week on the heels of several reports. Causing money to flow from Stocks over to Bonds were a far worse than expected Initial Jobless Claims report and Wal-Mart's announcement that sales are expected to slow in August. Since inflation remains one of the strongest opponents for Bonds and home loan rates, I will continue to monitor this closely. THE LOSS OF A LOVED ONE IS ONE OF THE MOST CHALLENGING EXPERIENCES OF LIFE. CHECK OUT THIS WEEK'S MARKET VIEW FOR IMPORTANT INFORMATION THAT CAN HELP YOU PERSEVERE AND MAKE GOOD DECISIONS DURING A VERY CHALLENGING TIME. Forecast for the Week This week, several reports will show us whether or not inflation is getting hotter. Thursday's Consumer Price Index (CPI) report will show us inflation at the consumer level - that is, how much more expensive goods and services are for consumers this month over last month. If CPI shows that inflation is growing, Bonds and home loan rates may reverse course and worsen quickly. But before the inflation news hit the wires, another market mover will likely be Wednesday's Retail Sales Report, which will show us the total receipts of retail stores. Changes in these numbers are closely followed as a timely indicator of broad consumer spending patterns. This month's report may show us if spending that had been aided by the Economic Stimulus Package has started to wane. Remember: A strong Retail Sales Report would be good for the Stock market - which stands to reason, as it would indicate continued consumer confidence and dollars being poured into the economy. But a strong Retail Sales Report would be bad news for Bonds and home loan rates, as money that pours over into an improving Stock market would be coming out of Bonds, and would in turn cause home loan rates to worsen. Remember when Bond prices move higher, home loan rates move lower...and vice versa. Bonds ended the week on a positive note, but are now facing a "ceiling of resistance" overhead that might shut down any further improvement. Like an Olympian faced with a barrier, Bonds will need a boost to break through a tough ceiling that has halted advances on five occasions in the past few weeks. The nature of the reports will determine whether Bonds and home loan rates can make more improvements, or reverse from the overhead ceiling and worsen. The Mortgage Market View... Avoiding Scams During the Loss of a Loved One I personally lost my beloved "Memaw" two weeks ago. She was 96 and very healthy until the last and I was blessed to be her granddaughter. This information is very important as the loss of a loved one is never an easy experience for a family, and people are often understandably distracted and overwhelmed with things to take care of. Unfortunately, scam artists often use the obituaries in the newspaper as a way to target potential victims. Here are some tips to help you or your loved ones avoid scams during times of loss: Protect Your Home: If funeral service dates and locations are listed in the newspaper obituary, scam artists will be able to tell when you will be away from home. And with friends and relatives visiting to pay their respects, neighbors may assume someone entering your house has permission to do so. To be safe, either ask a friend or neighbor to house sit while you're away, or let your neighbors know your plans so they can look out for suspicious visitors. Know Who's Calling: If you have caller ID on your home phone, make good use of it and don't answer calls from unknown numbers. This will help you avoid calls from companies or individuals who are running cons. Remember: Any companies or people who pressure you during difficult times probably aren't looking out for your best interests. Be Mindful of What You Pay: As you are going through papers, pay all bills that you know are legitimate like the mortgage, utilities, credit cards, and car payments. Do not pay anything from unknown parties or companies, including invoices, investment opportunities, calls for orders placed, or calls for money owed. Get a Second Opinion: Sorting through paperwork can be overwhelming during times of loss. Consider asking a friend, family member, or even a trusted professional like an accountant or attorney to review any invoices or claims before you send a payment. If you ever have any mortgage or financial questions regarding an estate, please let me know how I can help you. Have a blessed week. When we can be of assistance to you and your buyers, please don't hesitate to call us at 972-278-3400. Linda Linda Davidson, Senior Loan Officer, DE Underwriter Service First Mortgage 972-278-3400 office 972-497-6452 fax 1-866-963-3777 Toll Free http://www.davidsongroup.net/ The Davidson Mortgage Group Ranking 6th Nationally in FHA/VA Purchase Units Closed! Ranking 33rd Team in the Nation in Total Purchase Units Closed! Ranking #69th Team in the Industry for Total Units! Voted #1 Area Mortgage Team For The Past 10 Years We ARE The Home Buying Experts! Your Lender for Purchase, Refinances, Reverse Mortgages and Commercial Lending!! P.S. The finest compliment that we can receive is a referral from you . We appreciate your trust! Linda The Home Buying Experts! The Davidson Group Service First MortgageLinda DavidsonOffice: 972-278-3400 Email us at:ldavidson@servicefirstmtg.comVisit our website at:http://www.davidsongroup.net/