Who is Mel Watt? He is the one which is going to keep the rates low , thats who? Mel Watt the Incoming director of the Federal Housing Finance Agency

WASHINGTON (Reuters) - Congressman Mel Watt, the incoming director of the Federal Housing Finance Agency, said he plans to delay the increase in fees on government-backed loans that the agency announced this month.

The North Carolina Democrat was nominated by President Barack Obama in May and confirmed on December 10 by the Senate to head the agency that oversees Fannie Mae and Freddie Mac.

Watt said in an email late on Friday he expected to be sworn into office on January 6. He replaces Edward DeMarco, a career civil servant who has led the FHFA in an acting capacity since 2009.

"Upon being sworn in ... I intend to announce that the FHFA will delay implementation" of the mortgage-fee increases "until such time as I have had the opportunity to evaluate fully the rationale for the plan and the plan's impact," Watt said.

Fannie Mae and Freddie Mac, the two taxpayer-owned mortgage finance companies, are set to increase their guarantee fees in 2014. Such fees are typically passed along to borrowers, resulting in higher mortgage rates.

The FHFA signaled it would raise the fees in the days leading up to Watt's Senate confirmation vote. The move to reduce Fannie Mae and Freddie Mac's footprint in the mortgage market by raising prices was part of DeMarco's plans to gradually shrink the companies' operations.

A spokesman for the FHFA was unavailable for comment outside of normal business hours.

Fannie Mae and Freddie Mac buy mortgages from lenders, which they either keep on their books or bundle into securities that they offer to investors with a guarantee. They do not make loans, but provide liquidity to the mortgage market by taking mortgages off the books of lenders, freeing them to make more loans.

The companies currently back more than half of all U.S. home mortgages and are sweeping their profits from the housing recovery to the U.S. Treasury. Taxpayers have propped up Fannie and Freddie to the tune of $187.5 billion in bailout funds since they were seized by the government in 2008, but they have paid $185.2 billion to the Treasury in dividends for that support.

 

 

This was a article forwarded from

Ty Laffoon

Federal government favors high-income households over low-income ones in housing benefits

           

 

 

The Center for Budget Policy Priorities released a number of charts today that shows how much the federal government favors high-income households over low-income ones in housing benefits.

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This largely results from the fact that homeowners receive significantly more aid than renters and high-income Americans are much more likely to be homeowners.

In 2012, the federal government gave out $240 billion in housing aid. Income data is not available for all of it, but of what is available, more than half went to those with incomes greater than $100,000 ($81.6 billion). Only $40 billion went to those with incomes less than $50,000.

Overall, high income households receive four times as much in housing aid as low-income ones.

The main reason for this is the majority of federal housing aid flows to homeowners, not renters. The mortgage interest deduction is the most well-known program that subsidizes homeownership. That deduction alone is larger than all federal rental aid combined.

The federal government gave out about $60 billion in housing benefits to renters in 2012. It gave out more than three times that much to homeowners. Low-income households receive the vast majority of that rental aid, but the opposite is true of aid to homeowners. That flows primarily to high-income households. 

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Center on Budget and Policy Priorities

This comes at a time when renters are struggling to keep pace with rising housing costs . Fifty percent of renters now spend more than 30% of their income on housing. This has forced renters to cut back on other household necessities or live in inadequate units.

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Renters are more likely to face a severe cost burden (defined as spending at least 50% of income on housing) than homeowners are. This is a result of rising median gross rent and falling media income over the past 15 years.
For both renters and homeowners, the percentage of households that have a severe affordability problem with their housing has increased since 2001.

These problems are only going to get worse as millions of seniors find themselves in need of rental housing in the coming decades. 

Yet, while this silent crisis continues, the majority of the money that the federal government spends on housing flows to homeowners, not renters.

Ty Laffoon

Fed will cut bond purchases by $10B in January. Next the rates are going to go up and soon . 5% will be the new 4%

NEW YORK -- U.S. stocks soared even though the Federal Reserve announced that it would begin dialing back on its market-friendly bond-buying program in January, a decision that marks the start of a long-awaited shift back to more normalized monetary policy.
The Dow Jones industrial average surged more than 200 points after the Fed decision, as markets were soothed by the Fed's dovish comments overall, which suggests a still-easy Fed going forward.
The Standard & Poor's 500 index jumped 19 points to 1,800 and the Nasdaq composite index added 18 points to 4,042.
The Fed said it would reduce its current $85 billion in monthly purchases of Treasury bonds and mortgage-backed bonds slowly, trimming its purchases by a total of $10 billion per month. They said they would trim purchases of Treasuries by $5 billion per month, and mortgage-backed bonds by $5 billion, too.
More important, the Fed said it would keep short-rates low "well after" the unemployment rate, now 7%, hit 6.5%, which was a change in guidance that points to longer policy accomodation from the Fed.

The Fed's move was dubbed "Taper Lite," by Thomas Tzitzouris, an analyst at Strategas Research Partners.
In a statement, in explaining its decision, the Fed said it "sees improvement in economic activity and labor market conditions" that are consistent with growing underlying strength in the broader economy." It also said it would continue to monitor incoming economic data and continue its asset purchases "until the outlook for the labor market has improved substantially."

The Fed also stressed that it would continue to reduce asset purchases in "measured steps" if the job market continues to heal and inflation starts to move closer to 2%. Tapering, the Fed stressed, is not on a "preset course."
In explaining the market's positive response to what was viewed as a market negative, Paul Hickey, co-founder of Bespoke Investment Group said: "The market has been cognizant of the fact that this was going to happen at some point in the near future, so now that it has happened it is one less thing to worry about. Additionally, the rest of the statement was dovish as they said that the current rate environment would remain in place even after the unemployment rate dropped below 6.5%."
In the prior session, the Dow declined 0.1% to 15,875.26. The Nasdaq composite edged lower 0.1% to 4,023. 68. The S&P 500 dipped 0.3% to 1,781.

European markets were higher as Germany's DAX index gained 1.1% to 9,181.75. France's CAC 40 jumped 1% to 4,109.51 and Britain's FTSE 100 index rose 0.1% to 6,492.08.
Asian stock markets were mostly higher. Japan's Nikkei 225 index rose 2% to 15,587.80. Hong Kong's Hang Seng index climbed 0.3% at 23,143.99. The major European benchmarks advanced.
In energy markets, benchmark crude for January delivery gained 23 cents to $97.44 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 26 cents, or 0.3% to $97.22 a barrel on Tuesday

The Federal Reserve will rise rates and it will happen soon

The Federal Reserve is likely to keep the economy on a full dose of stimulus after this week's meeting but begin dialing it down by next month,

That would mark the Fed's first significant step in winding down the extraordinary easy-money programs it has put in place since the 2008 financial crisis and Great Recession, and signify that the economy should soon be strong enough to stand on its own.

The drama over whether the Fed will announce the tapering after a two-day meeting that concludes Wednesday has intensified recently, following a flurry of better-than-expected economic developments.

Just a handful of the 34 economists surveyed Dec. 12-13 predict the Fed this week will agree to pare its $85 billion in monthly bond purchases, but a slight majority say the tapering will begin by January. The purchases have held down interest rates and buoyed stocks, and trimming them is expected to gradually push up borrowing costs for consumers and businesses.

Yet that may do little to slow an accelerating economy. Monthly job growth has averaged about 200,000 the past four months, despite the federal government shutdown, and the unemployment rate fell to 7% last month from 7.4% in July.

Meanwhile, the Commerce Department this month estimated that the economy grew at a solid 3.6% annual rate in the third quarter, and consumer spending in the current quarter has exceeded forecasts.

This week, the House of Representatives passed a two-year budget deal that now awaits Senate action. If passed, it would remove much of the uncertainty about federal tax and spending policy that has clouded the economy.

"How long do you want to wait" before reducing the purchases? asks Paul Ashworth, chief U.S. economist of Capital Economics. He says the labor market's cumulative gains since the bond-buying began in September 2012 and recent momentum meet the Fed's standard of "substantial" improvement.

Ashworth adds that the risks of the bond-buying, such as eventual high inflation, are rising as the Fed continues to pump money into the economy.

Stuart Hoffman, chief economist of PNC Financial Services, generally agrees but says policymakers will wait until January to assess holiday retail sales and fourth-quarter economic growth. Like other economists, he thinks the Fed this week will signal that tapering is imminent by upgrading its economic outlook in its post-meeting statement.

But Barclays Capital economist Michael Gapen says the Fed will stand pat until March in part because much of the decline in unemployment has been due to Americans leaving the labor force, including some discouraged with job prospects. Also, about half of last quarter's economic growth was from business stockpiling that's likely temporary. And, he says, inflation remains well below the Fed's 2% target — the hallmark of a sluggish economy.

"It's better but not strong enough," Gapen says, noting that the Fed has repeatedly said it's seeking evidence that the economy's improvement will be sustained before tapering. He also thinks the Fed is unlikely to jolt financial markets that are expecting it to stay the course.

Still, "it's a fairly close call," Gapen says. "If they (taper) in December, I wouldn't be totally surprised."

forwarded by  Ty Laffoon

New Fannie Rules say 43% Max DTI

 

As the housing market heats up again following the slowdown of the past few years, many consumers will try to buy a home for the first time or upgrade a home with a mortgage that had previously been underwater. If you fall into either camp, you should know that a new set of rules passed as part of the Dodd-Frank Act - enacted in response to the financial crisis of the late 2000s - will go into effect Jan. 10, 2014. The rules will require lenders of qualified mortgages to conduct more thorough analyses of mortgage applicants' financial information to ensure applicants can afford to repay the loan.

According to the Consumer Financial Protection Bureau, under the Ability-to-Repay rule, the lender generally must consider eight factors. These include your current income or assets, current employment status, credit history, the monthly payment for the mortgage (based on the highest interest rate if it's an adjustable rate mortgage, not an introductory teaser rate) and your monthly debt payments (including the mortgage) compared to your monthly pre-tax income, which is your debt-to-income ratio.

Under the new rules, you'll generally need a debt-to-income ratio of less than 43 percent to obtain a qualified mortgage that's underwritten based on standards considered safe for consumers. Federal rules state that the term of the loan cannot exceed 30 years, and the points and fees paid by the borrower cannot exceed 3 percent of the total loan amount (not including bona fide points or discount points used to pay down the rate of the loan). Under the new rules, qualified mortgages also cannot have risky features such as an interest-only period, when the borrower pays only interest without paying down the principal.

[See: 10 Things to Watch When Interest Rates Go Up.]

"This sets the bar higher for consumers and changes the game in terms of how people lend and how they qualify that consumer," says Cameron Findlay, chief economist at Discover Home Loans in Irvine, Calif. He estimates that roughly 10 to 15 percent of consumers will not be able to obtain a qualified mortgage and predicts that this will have the largest impact on moderate earners and minorities, especially in higher-cost real estate markets on the coasts. "You'll see some consumers in Midwest regions be in a better position where these rules won't be as impactful" because home prices aren't as expensive, he says. Consumers who do not get a qualified mortgage may pay upward of 100 basis points - 1 percent - on the loan, according to Findlay.

Other mortgage insiders predict a less dramatic impact on prospective homebuyers. "Industrywide, a lot of people [are] freaking out," says Michael Rosenbaum, a mortgage loan originator with First California Mortgage Company. "There's minor shaving of the debt-to-income ratio, but the vast majority of my borrowers are not qualifying at the upper limits. I'm just not finding that everybody wants to push their margins." He says many mortgage originators already look at the same criteria that the new rules require, and there's still some flexibility for underwriting in certain situations. For instance, a self-employed borrower may still be able to qualify with a debt-to-income ratio higher than 43 percent if his or her finances are strong in other areas.

[Read: What to Know Before Gifting a Down Payment.]

While underwriting standards for conventional loans are tightening up due to new rules, David Reyes, chief investment officer at Reyes Financial Architecture, Inc. in San Diego and a former mortgage banker, says jumbo lenders (those who lend amounts larger than a conventional conforming mortgage) are actually easing up their underwriting requirements in some cases. "The actual jumbo interest rates are almost on par with conforming loans, and you're seeing one-year tax returns with some banks," he says. "Especially the community banks are being more aggressive with income qualifications for self-employed borrowers, which is something you haven't really seen since 2005 or 2006."

Should you hustle to close on a new home in the next month if you think you might not qualify under the new rules? That's not feasible for most people, so Rosenbaum says now might be a good time to instead call a trusted lender and find out where you stand. "People tend to think a lot of things about what their numbers are, but the formula of how we calculate the debt-to-income ratio is complex," he says. "Sometimes people are surprised that they qualify for more than they expected. Or sometimes the answer might be to wait a few more months until you've filed a new tax return if, say, you're self-employed."

[Read: What to Do If Your Credit Score Is Too Low For a Mortgage.]

Your FICO score is also a big component of the mortgage underwriting process, according to Findlay. The score impacts not only your ability to qualify for a mortgage, but also the interest rate you'll ultimately pay, so you may want to work on boosting your score by making timely payments or correcting any inaccurate information.

 

Ty Laffoon

619-630-0396

AS little as 1% down payment with FHA . 5% conventional

Don’t think you can purchase a home because you don’t have the cash on hand for a 20 percent down payment? Think again. It's now possible for people to get a mortgage with a small down payment - or even no down payment at all.
"Yes. You can buy a home without a large down payment," says Est P, senior vice president at Mortgage Services, a full service mortgage lender in . "But it is imperative that you work with a knowledgeable mortgage loan originator in determining what is the right loan program and loan structure for you."
Ready to find out how you can buy a house without that 20 percent down payment? One of these loan options might just be right for you.Pre-Qualify at   http://pbsd.primemortgageloans.net

Option #1 - FHA Loan

According to the U.S. Department of Housing and Urban Development's website, FHA (Federal Housing Administration) loans have been helping people become homeowners since 1934. Currently, homeowners may get loans with as little as 3.5 percent down.
"Low-income families may find this an easier way to purchase that first home," says Dan  director of mortgage sales of M Mortgage According to , the FHA loan typically has lower interest rates than conventional loans, and an FHA loan also has looser underwriting guidelines.
For example, "[a]n FHA loan can accept a low FICO credit score of 580, as opposed to the 680 required for a conventional loan," Hsays. You can also make your down payment using borrowed or gift money, something which many conventional loans don't allow.
"This means the borrower does not need any of their own funds to purchase a home," says Phillips. "However, the loan requires both a one-time insurance premium to be paid (which can be financed into the loan amount), and monthly mortgage insurance for the life of the loan," Phillips adds. "This monthly amount is typically more expensive than private mortgage insurance, which is used for conventional loans."Pre-Qualify at   http://pbsd.primemortgageloans.net

Option #2 - Conventional 97 Loan

As you might be able to guess by the name, the Conventional 97 loan allows you to finance 97 percent of the purchase price of a home, leaving you with just a 3 percent down payment.
"That product is very interesting," says Al H, a mortgage broker with over 30 years of experience. "It's really a great option for well-qualified borrowers without a lot of money for a down payment."
Unlike the FHA loan, however, the underwriting standards for the Conventional 97 loan are much tougher. For example, gift funds are not allowed for the down payment, and you'll need to demonstrate verifiable income and a good credit history.
How good of a credit score might you need? "Higher than average," Phil says. "Usually 740 or greater."
However, because of these tougher standards, lenders aren’t risking as much when loaning you money and as a result, may not charge you as much on mortgage insurance.
But, even though you may pay less overall for mortgage insurance, you may be required to pay mortgage insurance for the life of your loan (which is also the case with an FHA loan), Hsays. And although it may be possible in some cases to get rid of mortgage insurance, it won't be easy.
"If one's home has increased in value and they wish to remove PMI, they have many hoops to jump through (paperwork and appraisal) before that will be granted if they are not refinancing the original loan," he says.
Pre-Qualify at   http://pbsd.primemortgageloans.net

Option #3 - Fannie Mae/Freddie Mac

Fannie Mae and Freddie Mac are the nation's two federally-chartered mortgage finance companies. Although they don't give loans directly to homebuyers, they purchase mortgage loans from lenders to ensure that lenders have a ready supply of funds on-hand to continue giving mortgage loans to borrowers, according to their respective websites.
Fannie and Freddie also have some great programs that lenders can utilize to help borrowers get into homes without a large down payment.
"Freddie Mac Home Possible and Fannie Mae My Community Products allow for lower down payments (5 percent and 3 percent, respectively), lower private mortgage insurance premiums, and allow for funds to be gifted," says Phillips.
The program that is right for you will depend on your specific circumstances. While both Freddie and Fannie are quasi-governmental agencies, they aren't interchangeable, so make sure to do your research to help you narrow down your options.Pre-Qualify at   http://pbsd.primemortgageloans.net

Option #4 - The Home Path Program

On a related note, Fannie Mae has a program called the Home Path program - and for the right buyer looking at the right property, this could be a great fit.
"This is a program that has been put into place by Fannie Mae to help sell off properties that Fannie has in their portfolio," Hexplains. "The program allows buyers to buy with low down payments and no mortgage insurance." The catch, though, is that the program is property specific.
That means the property you're hoping to buy needs to be one of the properties that Fannie Mae owns - typically a home that has been foreclosed upon. But, if you do find a home that qualifies, the Home Path Program might make it possible to buy a home with less than 20 percent down, according to H.
"Even individuals who might buy property for investment instead of a residence can buy with as little as 10 percent down, as long as they can qualify," Hsays.

Option #5 - State Specific Programs

"Many states have housing authorities that, through bond sales, fund loan programs for first-time homebuyers," says P. While the details of the programs will vary state by state, Phil provides one example of an excellent state-run program from Illinois.
"The Illinois Housing Development Authority (IHDA) provides first-time homebuyers financing with as little as 1 percent [down] or $1,000 of the borrower's own funds," he explains. The way this works is that the IHDA gives the borrower a mortgage loan for the amount of the home, and then the borrower takes out a second mortgage loan at 0 percent interest for the down payment and closing costs.
In addition to helping a borrower land a mortgage with as little as 1 percent down, the IHDA also offers specialty financing to veterans or active military that provides up to $10,000 in down payment assistance.

Option #6 - VA Loan

There's a great program out there for those dedicated men and women who serve in the armed forces who are now looking to buy a home.
"For qualified veterans, they can purchase a home with a 0 percent down payment," says H. "That means 100 percent of the purchase price of the home is available for them to borrow."
H goes on to explain that "[t]hey have very low interest rates, and require no mortgage insurance. They also have very relaxed underwriting standards." It's a special perk, reserved for veterans who - by their service - have earned it. So if you've served, it might benefit you to check out whether or not a VA loan might be right for you.


To learn more about as little as 1% down payment with FHA . 5% conventional . Contact

Ty Laffoon
Business Development Manager
Pre-Qualify at   http://pbsd.primemortgageloans.net

While mortgage rates have indeed risen considerably, they haven't affected new mortgages

With the recent increase in mortgage rates, which are now considerably higher than the all-time lows we have seen over the past few years, it should not be too much of a surprise that fewer people are refinancing. However, the extent to which the decline in mortgage business is impacting banks' bottom lines remains to be seen. 

How worried should investors be? What impact will the lower mortgage business have on regional banking chains such as Regions Financial (NYSE: RF  ) , larger institutions such as U.S. Bancorp (NYSE: USB  ) , and mortgage leader Wells Fargo (NYSE: WFC  ) ?Ty Laffoon  Pre-Qualify at   http://pbsd.primemortgageloans.net

The roller-coaster ride of mortgage ratesMortgage rates have been rather volatile lately, after having fallen from an average of 4.45% in 2011 (already low on a historical basis) to a low of just 3.35% at the end of 2012. Since then, rates have risen back to around the 4.5% range, where they currently stand.Pre-Qualify at   http://pbsd.primemortgageloans.net

While mortgage rates have indeed risen considerably, they haven't affected new mortgages as much as refinancing. It may surprise you to learn that approximately two-thirds of all mortgage activity in the recent past has been due to refinancing, while just one-third is a result of new purchases. 

So, why do higher rates affect refinancing more? Let's say you took out a mortgage a few years ago with a 6% interest rate, and that the original loan amount was $200,000. That makes your payment $1,199. Refinancing at 3.5%, when rates were at their lows, would produce a payment of around $898, a significant difference. At 4.5% (around where rates are now), the payment jumps to $1,013.According to Bankrate.com, the average closing costs on a $200,000 refinancing loan are $3,754, so it's easy to see why the savings on the monthly payment aren't worth it once rates climb.

How it affects the banksBecause of the rise in rates, Regions is anticipating its mortgage originations to drop by about 15% in the fourth quarter, with an additional decline in 2014. The company's mortgage income declined by $17 million from the previous quarter as a result, which may not seem significant given the company's total net income for the quarter was $1.32 billion. An extra $17 million in profits per quarter would translate to an additional $0.05 per share in annual earnings, or a 6% increase on expected earnings for 2013.

U.S. Bancorp reported an even greater impact, with the company expecting a quarterly decline of about 30% in its mortgage revenue for the fourth quarter, which had already dropped by 17.2% from the second quarter. A much larger company than Regions, U.S. Bancorp's earnings will suffer even more, as it derives about 6% of its revenue from mortgages (based on third-quarter numbers) as opposed to less than 4% for Regions.

Wells Fargo is the No. 1 mortgage originator in the U.S., so let's see how the refinancing slowdown could affect the company. Wells Fargo's mortgage income dropped 43% year over year to $1.6 billion in the most recent quarter. Even after the drop, mortgage banking still comprises 7.4% of Wells Fargo's revenue, so it stands to reason that Wells should suffer the most if the declines continue. However, if rates dipped again and the mortgage market stabilized, Wells Fargo would stand to benefit more than the other two companies mentioned.
Pre-Qualify at   http://pbsd.primemortgageloans.net

So, what does it all mean?The good news is the consensus believes these declines won't continue. Wells Fargo has publicly said it expects the mortgage market to stabilize next year, and although refinancing may not entirely recover to last year's levels, mortgages on new purchases should be a primary driver of growth going forward. Several banks (including Wells Fargo) are offering low down payment loans for the first time since before the mortgage meltdown. 

The bottom line is that these banks are very well run, and as long as the housing market continues to improve, banks will find a way to meet the mortgage needs of the market. So, any weakness in share price that results from bad mortgage news is likely to be an excellent buying opportunity, taking advantage of what is likely to be a temporary problem.

Ty Laffoon

Business Development Manager

Prime Mortgage Loans