As I was reading more about the housing industry, I discovered that approximately a week ago E-Loan announced that it is going to offer FHA Loans to help millions of customers in this ever increasing tightening credit market. I can just see people now, getting online and going to e-loan and completing an application. We have all read about home values are declining all across the nation. This will give home owners the opportunity to keep their piece of the American Dream.

I applaud E-Loan fully for providing this opportunity to these millions of families. We all know what FHA has to offer such as lower down payments, the downpayment can also be gifted from a relative, they have borrowers from all across the credit spectrum and even more. Let’s face it, even with those few qualifications there are more people that should be able to qualify and get the desired assistance they are looking for.

Every day someone is facing impending foreclosure due to a lack of information, help and even fear of talking to someone about their financial situation. One thing that appears to me is that with E-loan you do not have to physically face a person and should be able to get the majority of this handled through an online source. I have to say this because I remember when I was dealing with difficulty in my finances and the last thing I wanted to do was talk to someone face-to-face that was near and dear to me because it hurt. It was easier to talk with someone who did not necessarily know me and there was no judgment being passed.

FHA Loans are available on many different levels – not only can the first time home-buyer get a FHA Loan, there are also products for people who are refinancing, FHA Secure and more. I strongly recommend you go through this blog and see the different products that FHA has to offer. The answers could literally be within your reach and you miss it because you are not taking the time to review each area. Take a deep breath and sit down and read all the information.

Let me give you a prime example of what I mean. I had a colleague share with me the other day about a foundation that could be of some interest to us on a project we are working together own. When I went to their website, I was very impressed and share with the colleague we should definitely speak with them. Tonight, I was looking through some of our local papers and community papers before throwing them away. Little did I know, when I was going through our community paper that same foundation was in there about them beginning a chapter in our neighborhood. That information was printed over a month ago but because I did not read the paper when it came, I did not have the information. Now that I know about them, sure it adds some credibility and I have to think maybe we were not ready at that time to get the information.

I am saying that to say, maybe you have looked at FHA information before and did not see how it worked into your situation. Stop and take the time to review it again and maybe your eyes will be opened.

Dr. Taffy Wagner

There is so much going on in the housing industry that it is time for me to catch up so that our readers will not feel as if we have forgotten about them. It appears that every day for the last few weeks that I have been slammed with various projects, more and more has happened in the housing industry on many levels. I want to almost dedicate this first blog to those who are homeowners that are facing hardships. You have to understand when things begin to get tough; you might not believe you have anyone that you can reach out to. It is not true.

First and foremost, do not let your pride keep you from seeking help or answers because you think no one will understand. What I am about to share is something that I am hearing too often and it sickens me to think that people are this callous when it comes to someone asking for help. Let me explain what I mean. I have heard more than once of a person who knows they are going to have a few difficult months contacting their mortgage company saying I am going to have a few difficult months and I want to be able to pay a partial payment because I know that I am not able to make the full payment. Is there anything you can do to work with me? Then the person at the mortgage company basically saying, we cannot help you out.

Is it me or is some money better than no money? Instead since the customer believes they are no better off, they end up not making any payment because the mortgage company will not work with them and they are on the verge of foreclosure. What happened to working with the customer instead of being part of the problem? If the person did not contact the mortgage company and things started happening, I would be of the mindset maybe something is happening. In the above situation, the customer (who has had a perfect on-time record) of paying their mortgage payment contacted to say I know there is a situation can you help. What good does it serve a mortgage company to be cold-hearted?

When this family is facing foreclosure, you better believe they will share the story of how they contacted their mortgage company and they turned their back on them. They became more of the problem instead of being a part of the solution. Imagine if the mortgage company had said, yes here is what we can do to work with you. Would this client be telling everyone they know about how their mortgage company became an ally versus an enemy? With a move like they made, they became an enemy. Only thinking of themselves and not looking at the overall picture.

This truly saddens me that this is happening to people all over the United States because no doubt it is. Hmmm maybe we should stop and look at the ones that are under investigation and maybe this is part of the reason. I encourage you if you are in a situation and have contacted your mortgage company and the person on the other end seems to be a roadblock, keep calling until you get someone that will listen and take action on your behalf.

Dr. Taffy Wagner

Is this supposed to be a surprise to anyone seeking to get a loan in this housing market? Seriously because almost day after day we are reading increasing stories on the number of foreclosures, the mortgage rate and even lenders. Maybe the actual fact the guidelines are being tightened is not a surprise but what they are saying is. I must admit I was stunned to find out this was happening.
I read a story that came out of Ohio that shared how the guidelines are being tightened on mortgage lending. It shared that basically due to the sharp increase in foreclosures nationwide, Fannie and Freddie are implementing tighter underwriting guidelines on approving a family for a home loan. Some changes are significant and have begun to take lenders, real estate agents and prospective homeowners by surprise.
I want to share a few of these that I know will affect homeowners: one of the biggies I would believe would be the Appraisal Guidelines. Why, because with the market being soft there is not in my opinion any way that your home could appraise at the same value today in 2008 that it might have appraised for at the end of 2006 or beginning of 2007, especially with homes in your neighborhood or area that have been foreclosed on. Foreclosure affects home owners that are not facing foreclosure because the number of foreclosures in the neighborhood brings down property value.

I remember when we were selling our home, we had the standard walk through appraisal. Now it seems, in addition to the standard walk through appraisals by a licensed appraiser, lenders now are requiring an automated valuation model which is statistical data from all the real estate sales that have taken place in that specific area. The rule now says whichever value comes in less will be the true market value. It goes on even further to say if the assigned appraiser declares your home to be in a declining market or should the new automated underwriting track your property as an area deemed to be in a declining area, the buyer cannot get 100 percent financing. I know that will affect some people.
We know that one of my favorite subjects is credit. Apparently it is one of the topics of discussion here as well.

From what I can gather, Fannie Mae and Freddie Mac’s major changes take place in March 2008 affecting how conforming mortgages are priced with an interest rate. The new guideline will (not optional) require lenders to review credit scores and down payment information before a mortgage rate can be offered. New interest rate adjustments will apply to high loan to value, low scores, cash out refinances and investment properties. Once again, credit score is important. A point that I found interesting was at the end of this story it said these changes have not affected programs from The Federal Housing Administration. In an FHA mortgage loan, the mortgage insurance is provided by the borrower and included in the loan. As I have said in previous blogs, do your research. Talk to a lender and see what your options are. If you are strictly seeking an FHA Loan, know that all lenders are not FHA approved. I cannot stress doing your due diligence enough.

Dr. Taffy Wagner

I am sure you are aware that I absolutely love learning new information and sharing it with our readers. If information that has been shared keeps you from spinning your wheels and making wrong choices, it is all worth it. One factor of that is are you ready to receive the information and apply what you learn. I have to tell you, it is crucial that whether you are dealing with home ownership or any other area of your life, you must remain teachable. If you do not you are setting yourself for a lot of mistakes.

With everything that is happening in the real estate and housing industry, I don’t believe you can ever get too much information about different types of loans. I have decided to share with our readers about Graduated Mortgage Payment Insurance. This is also called Section 245. Section 245 enables a household with a limited income that is expected to rise to buy a home sooner by making mortgage payments that start small and increase gradually over time.

I have to share right now even though I know it is not. Sounds almost like an ARM. We all know that FHA administer mortgage insurance programs that assist low and moderate income families become home owners by lowering some of the initial costs of their mortgage loans. I must admit I can see how this might help different job professions; however, I would recommend that a consumer look at the timing of when they are expecting to receive that increase and when they want to purchase.

We have all heard, “TIMING” is everything. It is whether it is purchasing a house, a car and even choosing a loan. Let me caution our readers and say do not be too hasty and end up in a situation that has dire consequences. Take your time and read about all the different types of loans and discern what best fit your needs, paycheck and how you want your picture of the American Dream to look.

If you are a potential homeowner and considering a graduated-payment mortgage to purchase a home you must remember you monthly payments to principal and interest will increase each year for up to 10 years, depending on which of the five available plans they select.

Let me share some of the details about the plan. Three of those five plans permit mortgage payments to increase at a rate of 2.5, 5, or 7.5 percent during the first five years. Needless to say if you have not prepared for this during those five years, you could end up in a very sticky situation. The American Dream begins to turn into a nightmare. Research, research and more research. The other two plans permit payments to increase 2 and 3 percent annually over 10 years. It is great to have options. Make sure you are honest with yourself about your finances before you begin your journey of home ownership.

Dr. Taffy

Just when they probably think it could not get any worse, Countrywide is under investigation by several states. I read where one former employee was suing Countrywide and KB. Apparently Countrywide is under investigation because of its subprime lending practices. How many times have we seen those same companies that did subprime lending come under fire or end up filing bankruptcy themselves.

Look at some of these details that I read about when I was looking at Countrywide. The attorney general’s office
Florida started a mortgage fraud hot line last year. They received 150 complaints on Countrywide. That is a lot of complaints and makes me wonder if any of those are duplicates. Seems Attorney generals in
Illinois and
California are conducting similar investigations. I do applaud these agencies for stepping up and taking action. One thing that I encourage the readers and potential home owners is to do your research. Do not let someone tell you how you should think or decide about a particular situation.

Do you guys remember when Countrywide suffered heavily under the weight of the subprime fallout. Then Bank of America comes in to the rescue. Seems as if this is not a good mix though. SRM Global Fund, which owns a 5.2% stake in Countrywide stated the acquisition is a bad deal for shareholders. This makes me want to ask the question if this has been publicized in the media. This information sure does make you think if this is going to go through or not.

Countrywide has even had a quarterly loss of $422 million. I know if that were me, I would definitely have to do something different. That is a very significant loss and will probably continue to incur loss. I thought I read earlier today where the CEO forfeited some of his bonuses in order to give that money to the shareholders. Of course because I want to share it with my readers, I can no longer locate it. He wants to do what is best for the consumer.

Even as Countrywide is under the looking glass in my opinion, I saw a news breaking story that said Countrywide sent a letter to 122,000 customers last week telling them they could no longer borrow against their credit lines because the total debt on the home exceeded the market value of the property. The lender says it is using computer modeling to determine which of its customers would have their cash spigot shut off.”I can just imagine the people feeling they were getting some relief and now they are going to worry and stress all over again. They did not get an opportunity to get some things cleaned up. Now they are back to square one. During the beginning of any year, people seek the opportunity to clean up finances and start fresh. For those people that are affected by this decision, I hope they had the chance to correct some things when it comes to their home.

Stay tuned. I am sure we will be hearing more and more about Countrywide over the next few weeks.

Dr. Taffy

Last year when I began writing this blog I talked about reverse mortgages. Recently I read a story that I felt was worth sharing about even here regarding reverse mortgages. Before I elaborate on that story let’s go back and recap who qualifies for a reverse mortgage. First, the borrower must be 62 years or age or older. If you are not this age or older, you do not qualify for a HUD reverse mortgage. I would say move on to find other options for your particular situation. Second, you have to own your home outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan. Does this make sense at this point? Third, you must live in the home. Fourth requirement which notice I did not say optional is that you receive consumer information from HUD-approved counseling sources prior to obtaining the loan.

According to a new study released by AARP’s Public Policy Institute, few seniors are choosing to take advantage of reverse mortgages. The AARP report, based in part on its 2006 national survey of reverse mortgage shoppers, found that seniors interested in a reverse mortgage were more likely to do so for reasons of necessity (48 percent) than for money to provide “extras” (38 percent). “When asked to name the ‘main reason’ for looking into a reverse mortgage and the ‘main use’ for the loan proceeds, borrowers most frequently mentioned paying off existing mortgages,” the AARP said. Just as I shared before it seems that most would look into to meet health care and disability cost. When our parents get elderly and their health begins to change, you might be surprised that they need some additional income to pay for their medicine or other health needs. I can understand how they would look into a reverse mortgage.

So why aren’t seniors giving it two thumbs up and applying. One of the reasons cited most often was high costs. The AARP noted, adding that 69 percent of borrowers surveyed also said the costs incurred to obtain an FHA-insured reverse mortgage were high. Ask yourself, how many times have you walked away from a loan of any sort because the costs were too high. Let’s face it when you are dealing with a home loan there are fees – i.e. origination, appraisal, standard closing costs and more. By the time the seniors pay for all of that, they would have incurred more costs that they were not ready for. What could they have applied that money towards and continued to do what they were already doing before they entertained applying for a reverse mortgage.

I was recently with my mom for a period of time and I know that a reverse mortgage is not one of the things I had even thought about with her. I am sure it is not something she has ever thought about as well. She and I are of the same mindset and look forward to paying that last mortgage payment and owning the house, not begin incurring costs in her retirement time.

I recommend any senior do your research and homework before going into a reverse mortgage. Make sure it is the appropriate option for you.

Dr. Taffy Wagner

As I was on a working vacation last week, I listened to President Bush’s last State of the Union address. I was prepared for the topic of foreclosures and home ownership because every day in the media those remain very “HOT” topics. He did address that topic because so many people are affected. I did some research and found out that the House approved two measures this past Tuesday which are designed to boost the ailing housing market as part of the economic stimulus package. I tell you what we can all say “OUCH” about the housing market. In some way we are all affected by what is happening in the housing market. I am sure like me, you know someone that has faced foreclosure and having a lot of foreclosures in a neighborhood affects your property as well.

This is one of those times where it does not appear to be a light at the end of the tunnel. I continued to read about what the House approved. Seems they were under pressure from the Bush administration and the lawmakers limited the duration of one of the measurers. Apparently the plan raises the maximum size of mortgages Fannie Mae and Freddie Mac can buy from $417,000 to as high as $729,750 in expensive parts of the country. The propose increase would expire at the end of the year. The House also passed stimulus bill increases the size of Federal Housing Administration backed loans from $352,790 to as high as $729,750 in expensive areas until year-end allowing more borrowers with weak credit to refinance into federally insured loans.

I am all for consumers having the opportunity to get into loans that are fixed per se and federally insured so that they begin to get some relief and know that people are concerned about them. I applaud FHA for wanting to serve more consumers and help them in their time of need. All the different solutions that are out there I believe eliminated a lot of the people that were really in trouble and needed the help. For example, I remember one of the solutions talked about they could not have been late on a payment in order to apply for assistance. Well, given the current state of the housing market if they had not been late on a payment why are they receiving additional options for their mortgage. They are not the ones that need it.

I will be watching to see how the above loans help those that hurting in this market.

Dr. Taffy Wagner

Over the last couple of weeks, I have steadily been keeping up with the news on mortgages and what is happening in the industry. Let’s give a brief recap because no matter what you read, you are going to find that many copies are returning to offering FHA products as a part of their equation. I honestly cannot blame them because there are so many people dealing with situations that they didn’t even know they would face. Consequently, they need viable options and FHA provides realistic solutions.

As recent as yesterday, I read that Sun West Mortgage Company has launched a web-based training series, its free and on comprehensive FHA and reverse mortgage. As a person that has taught web-based training, it is a huge advantage and allows many different people to attend that otherwise might not have the opportunity.

I must applaud them for being one of the companies that steps out and offers this program in another format. Mortgage professionals can schedule themselves for the class and even without knowing the details of this class; I do believe that it should be researched. Find out the ins and outs of the different classes and how it can benefit your career as you are in a position to help many homeowners.

I read another article that stated Green Valley Mortgage in Bloomingdale recommends if you are a first-time buyer to consider an FHA mortgage. The senior loan consultant for Green Valley Mortgage outlined some of the requirements for an FHA loan. When I read there are some down sides and one of them being that the mortgage must be $275,200 or less it made me want to stand up and say — choose a starter home and do not focus on your dream home. You will set yourself up for success versus failure if you begin with a starter home. Depending on the area where people want to live, you should be able to find a starter home within the parameters of an FHA mortgage.

The next topic that continued to be discussed was reverse mortgages. Understand that the reversed mortgages are being offered to the older home owners. What I wasn’t aware of and you know how much I love learning is there are three types of reverse mortgages. The types are FHA-insured, lender insured and uninsured. As with anything, the parameters are different for each. Research, research and more research. Even with an older home owner, especially if this is an elderly parent, I would also recommend they in particular talk this option over with an adult child or even a lawyer to make sure that you are not being taken advantage of, nor going to lose your shirt because you did not foresee a situation.

Whether you are a first-time buyer, someone who seeking options to avoid foreclosure or even an older home owner looking at options, FHA offers many solutions that should be considered. If you do not fit into one category that does not mean another option is not available. As I have stated throughout, do your research and find out what is best for you. It is a new year and let’s make better decisions.

Dr. Taffy Wagner

As many of you might now, I am a personal finances expert and home ownership advocate and I thought it was time I write about this. I was reading an article that was in the Associated Press titled All Business: What’s Behind Foreclosure. One of the first thing that peaked my interest was how this writer shared a simple plan for the government to stop foreclosures: here’s a simple plan: Boost Americans’ income, put more funding toward medical research and insist on marriage counseling for all. I was somewhat fascinated by that statement because I have often received the comment when going through a fast food drive through window from the workers, the price of the food continues to raise however, their pay is not going up. Have you ever stopped and looked at that? I made it a point to note that comment because it showed me that employees are paying attention. What does that say for quality of life when you are paying more for food but your income is not increasing regardless of the job you perform? Think about when gas prices increased and it seemed so drastic. Well it was drastic. Did some of your other bills begin to suffer? I know we had to get very creative because that was a huge increase for the cost of gas.

The second thing I looked at was where she says put more funding towards medical research. I say medical research and making sure everyone has healthcare. How many people are without medical care and cannot afford proper treatment? People end up facing some very hard choices – do you seek medical care and purchase medicine or are you paying for your utilities? Let’s be realistic these are choices that someone is dealing with every day, thereby making their quality of life deteriorate. It is disheartening to think that some of my elderly family members could be struggling with health and cannot really get the care they need. It is beyond a point of want and reached a level of need.

We have all heard and read how money, lack of money or finances are one of the top causes of divorces. Some might even say it is number one. So what would you expect to happen when a family begins facing foreclosure? The finger pointing started some time ago, communication has probably broken down and the couple cannot agree on a proper solution. The article that I was reading her third item was insist on marriage counseling for all. Many people probably could benefit from marriage counseling right now when facing foreclosure on relationships and finances. Why do I say this? Primarily because if they are not able to see why this happened, they will repeat the pattern. It is very beneficial to have an outside person review everything and give an unbiased solution. I will share this, when there are financial challenges it begins to affect health, work performance and many other areas of your life. When people are facing foreclosure, they probably are dealing with stress, fear and uncertainty. These feelings can cause health issues and impact your marriage. I agree with the writer of that article some of the areas that need to be addressed are income, health and marriages.

Taffy Wagner

With all this talk in the news and media about foreclosures lately and different programs to help those facing foreclosure, I began wondering about refinancing. So many times people refinance their loans and I thought someone is probably asking themselves this very question – can they refinance their FHA home loan? While they are thinking about this question to themselves and not asking a person, they begin to become anxious about their housing situation. Not knowing the answer to questions can lead one to a path of wrong decisions and stagnant path, not taking action which can be detrimental. Read the below information slowly and carefully because this could be the answer you are looking for.

An FHA streamline refinance is a mortgage refinance of an existing FHA loan with limited amount of documentation and qualifications which streamlines the process. I have to admit when I think back to the loan processing for purchasing a house or car, it takes up some time. Sitting there going through pages and pages of information, terms, and more making sure nothing is left out. I applaud the fact they have streamlined this process. These times made me feel as if I was enlisting in the military again. Now that you are aware of what a FHA streamline refinance is, let me share regarding the cost. This is always going to be important. There are many types of interest rate and fee combinations for FHA streamline refinance. Check with your lender for what the parameters are.

You know that I could not let you guys think that is all there was to this loan. Of course not, there are qualifications. You should not even be surprised because you have to qualify for most things today. Seems there are only two qualification requirements which are (1) must currently have a FHA loan; and (2) must be current on mortgage payments. I ask you if you were not current, why would you be applying for an additional loan? It does amaze me sometimes watching the news hearing what people are saying.

For those that were preparing to ask this question, is there a difference between a normal refinance and an FHA streamline refinance, the answer is a strong yes. The difference from what I surmised is qualifications and documents required to qualify for the loan. The benefit to me is streamlining. If this limits the amount of documents and qualifications, this could be the one for you. A big one before I forget is that with a typical refinance loan the loan cost will be higher than an FHA streamline. Oh another huge benefit to this is FHA does not require an appraisal for a FHA streamline. How many of you know the costs of an appraisal can sometimes get you? For that reason alone, you should be doing your homework and researching what you think is best.

The main concern I have is that you go to a loan officer and have not fully done your research on the type of loan you are seeking and then get turned down. You can never have too much knowledge. Take the time to research all types of loans and decide on what works best for you.

Taffy Wagner