The proposed change was announced last month as part of the Obama Administration’s report to Congress. This change is largely driven by the rapid increase in the use of FHA financing which now is approximately 20% of all home loans currently originated.

The annual MIP (mortgage insurance premium) will increase .25% on all 30 and 15 year loans effective April 18th, 2011. Existing FHA loans are not impacted by the price change, and currently there is no changed planned to the 1% upfront mortgage insurance premium (UFMIP) charged by FHA on all loans.

Below is a chart of the changes effective 4/18.

What is an MCC?
An MCC is a dollar for dollar tax credit on a borrower’s federal tax return. This credit is used to offset a tax liability.

Who is eligible?
MCC’s are generally limited to First Time Home buyers. Some State/Local Housing Financing agencies allow buyers in targeted area’s to be non-first time buyers. Generally MCC’s are limited to low to moderate-income borrowers. Income limits vary according to the geographic location of the property.

How much is the credit and how is it calculated?
An MCC credit is equal to a minimum of 30% of the interest paid by a borrower during the year, but it is available every year as long as the borrower resides in the home. That could worth thousands of dollars!

How will it help my clients?
If a borrower pays $6,000 a year in interest and has a 30% MCC credit, that credit amounts to an extra $1,800 for the borrower over the year. In addition for borrowers with higher debt ratios the MCC credit may help them qualify.

How do my clients take advantage of the MCC program?
We will help your clients determine their eligibility. If eligible we will help them complete all necessary paperwork.

Learn More Here;
http://www.tdhca.state.tx.us/homeownership/fthb/mort_cred_certificate.htm

Give me a call to learn all of the details and to find out how to use an MCC to sell more homes!

Mark Hairston
(512) 789-6967

After 25 years as a Mortgage Professional here in Austin, one area that repeatedly comes up with both the Real Estate community and consumer is the subject of credit scoring and how it affects loan underwriting. With all of the drastic changes in over the past few years in loan products, the issue of credit is more important now than ever.

Simply put, a credit score is a three-digit number based on a borrower’s bill-paying history and debt profile and statistical information about other borrowers that lenders use to determine the likelihood of certain credit behaviors, including whether you will pay on time.

The score that Mortgage lenders use in loan underwriting is called a FICO score. This is the model developed by Fair Isaac & Co. Credit (FICO) back in the late 1950’s. Since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrower’s credit history into a single number. Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance.

There are really three FICO scores computed by data provided by each of the three bureaus––There are three major credit bureaus in the United States:

Equifax: 800-685-1111 website: www.equifax.com

Experian: 888-397-3742 website www.experian.com

Trans Union: 800-916-8800 website: www.transunion.com

Your Credit score is based on the final number of individual ratings in five categories:

• 35% of your score is derived from payment history
• 30% of your score is derived from outstanding balances on accounts
• 15% of your score is derived form length of credit history
• 10% of your score is derived from types of credit you carry
• 10% of your score is derived for frequency of credit inquiries

So, how can I increase my score? While it is difficult to increase your score over the short run, here are some tips to increase your score over a period of time.

• Pay your bills on time. Late payments and collections can have a serious impact on your score.
• Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
• Reduce your credit-card balances to 30% of the credit limit. If you are “maxed” out on your credit cards, this will affect your credit score negatively.
• If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.

But with fewer buyers in the market, it’s more and more difficult to gain new customers, and many are forgetting about the ones they’ve serviced over the past several years.

If you’ve been in the real estate market for some time, there’s more than likely some real gems in your current database–but beyond sending them calendars and postcards, what’s the best way to get them to engage with you again?

In the book Influence: The Psychology of Persuasion by Robert Cialdini, it talks about the Reciprocity Principle–and the “rule says that we should try to repay, in kind, what another person has provided us.” In other words, if you do something that the customer perceives as great value, they feel that they owe you, and they will repay you with your ongoing business.

The book uses an example of an interesting study where “Joe” was to sell raffle tickets to person he was working side by side with. In the first condition of the study, Joe would ask the person if they wanted to buy a raffle ticket, and in the second condition, before asking the other person to buy a ticket, he would get up during a break, go purchase two Cokes from the machine, bring the second one back for the other person, and explain that he thought they might like one too.  The results were overwhelming in terms of the sales of raffle tickets under the second condition as opposed to the first.

So how does all this apply to getting your customers coming back?

It’s called our WOW! Advanced Realtor Marketing Program, and it’s open to any of our Realtor partners! This one of a kind Realtor specific program was created to help you take your business to the next level.

• Stay relevant in today’s market
• Win every listing opportunity
• Create synergy to expand your business
• Create a consistent & predictable stream of referrals
• Create CUSTOMERS FOR LIFE!

All of these communications open the door for you to develop an ongoing relationship with your past clients, and it gives you the opportunity to talk about taking advantage of move-up situations, refinancing, and so on. It also gives you a sense of when they may be looking to change their situation, and helps you create a more effective pipeline of business.

Call us to talk about how effective this program has been for our clients–in this market, we need every advantage we can, and in our experience, this has been the strongest. Or, sign up today for one of our free WOW! Introduction Seminars! Call us today at (512) 472-3500 to learn more.

Legality issues surrounding the foreclosure process are a hot topic. In no way is this good news for  housing. Besides adding more uncertainty to an already uber uncertain marketplace (home prices specifically),  these precedings are already affecting pending transactions of new homebuyers and originators.

We shared this feedback from an originator who has already experienced a delay in the closing of their purchase transaction because the property was a JP Morgan Chase foreclosure…

“I have a client in Florida that closed on his sale in Florida on Thursday, and was supposed to close on his purchase of a Fannie Mae owned home this Wednesday. Well, last Friday he received a notice from the title company that they have indefinitely suspended the sale, due to the previous owner & servicer being JPM Chase.  However, the borrower was foreclosed on two years ago.  So now, with a wife and two dogs, my client has nowhere to go.  The auction company gave him until today to cancel and get a refund of his deposit, or to extend for 6 months, but with no direction on a closing date.”

How long will this mess take to sort out? When can loan closings go on as usual? What about rate locks?

You can either wait it out or get a refund on/tear up your earnest money deposit and find another property. Obviously you should avoid foreclosed properties if you withdraw your application and restart your home search. If you decide to wait it out, you can get a lock extension, but at this point I would try and relock at lower rates. Don’t blame your loan originator for these problems. Honestly, so far from what I can tell……

This is a procedural loophole. Lots of noise surrounding a technicality. But why does no one stop to consider the cascading consequences? Felix Salmon does that neatly below.

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On Reuters, Felix Salmon writes  Where is the Forclosure Mess Leading?

Yves Smith and 4closureFraud have doing an astonishingly good job of keeping on top of all of the legal matters surrounding mortgage foreclosure. There are lots of them — do you know what phony allonges are? — and they are all very complicated, and they vary from state to state and from bank to bank, with the result that it’s really hard to sum it all up in a simple overview. But it’s impossible to read those sites and not conclude that we’re at the early stages of an absolutely monster legal mess.

Any one of Smith’s posts is astonishing enough — try here for a good starter, although you could do worse than to start here or here if you’re in Florida — but put them all together, and it becomes clear that the mother of all legal messes has already emerged from the foreclosure crisis, and threatens not only a large chunk of the financial system but also venerable civic institutions, like the courts, which have thus far emerged from the crisis largely unscathed.

While there’s some evidence that Congress is willing to find a bank-friendly way out of this mess, I don’t think that’s going to fly, not when state AGs are already filing lawsuits against the likes of GMAC.

Argentina’s sovereign default has been called “the slowest trainwreck in history”, but this one might turn out to be slower, bigger, and much less fair. Millions of people have already lost their houses to lenders who didn’t have the proper paperwork, and it’s unlikely they will ever get any redress. For people who haven’t yet been foreclosed upon, however, it could now be a very long time before they lose their house.

The big-picture consequences here are by their nature unpredictable, as no one has a clue how this might all play out. But I can think of a few themes:

1. Bond investors, who have seen the value of their mortgage-backed debt rise impressively over the past 18 months, could find themselves unable to find any kind of bid at all. The paper will still be cashflowing, but those cashflows will be surrounded by enormous uncertainty, and no one’s going to want to buy them except at extremely deep discounts until the mess is cleared up.
2. Mortgage servicers will go from being assets to being liabilities, and banks which own mortgage servicers could find themselves on the hook for substantial losses.
3. The time from default to foreclosure will become indefinite, and as a result there will be a significant uptick in strategic defaults, especially in states with judicial foreclosures.
4. The “shadow inventory” of houses which aren’t on the market but will eventually be sold once the bank gets around to foreclosing will grow substantially from its already-enormous level.

All of this is going to be very costly and very unpleasant for all concerned; the only winners I see here are the lawyers. Add in possible securities-fraud charges against investment banks which underwrote a lot of these bonds, and the end result is a level of legal chaos I can barely imagine, in both the civil and criminal courts. And I see no easy way out at all.
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Wait there is more!!!!

From CNBC: Bank foreclosure cover seen in bill at Obama’s desk…

“A bill that homeowners advocates warn will make it more difficult to challenge improper foreclosure attempts by big mortgage processors is awaiting President Barack Obama’s signature after it quietly zoomed through the Senate last week. The bill, passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt, requires courts to accept as valid document notarizations made out of state, making it harder to challenge the authenticity of foreclosure and other legal documents.”

That bill is H.R. 3808, the Interstate Recognition of Notarizations Act of 2010, and President Obama refused to sign it today. These comments were just published on the White House blog:

“As the President has made clear, consumer financial protections are incredibly important, and he has made this one of his top priorities, including signing into law the strongest consumer protections in history in the Wall Street Reform and Consumer Protection Act.  That is why we need to think through the intended and unintended consequences of this bill on consumer protections, especially in light of the recent developments with mortgage processors.”

President Obama didn’t have a choice, he had to axe the bill, if he didn’t, he would’ve been committing political suicide.

So were stuck in the mud and the saga continues with no end in sight…so much for the two month uptick in Pending Home Sales!

Here is a list of top lawsuit targets, ranked by loans in servicing.

Someone or somebody must put a stop to this mess or I might have to move to Canada………..

Who qualifies?
Members of “uniformed” services
Members of Foreign Service of the United States

Employees of the Intelligence Community
and those on Extended Duty, defined as having “official orders outside the US for at least 90 days in the period between December 31, 2008 to May 1, 2010. In other words, any active veterans that meet this qualification will receive the same home buyer tax credit if they are in contract to purchase by April 30th, 2011 and complete the transaction by June 30th, 2011.

One of the other benefits in the extension is a waiver on the time of occupancy, which is great because most home buyers that took advantage of the original tax credit had to use that home as their primary residence–but this provision does not apply to veterans. They do not have to repay the credit if they sell the home in less than three years, if they have to move because of official business.

There’s also a provision for current home owners–they’re eligible for a $6500 tax credit if they have lived in the home they are selling, or have sold as their principle residence for five consecutive years over the past eight.

The income limits have also been increased to $125K for single buyers and $225K for couples, and the purchase price of the home cannot go over $800K.

I’ve found that many veterans are not aware of the extension of this tax credit, so if you know any in this position, please let them know about this great opportunity–and thank them for their service.

Mark Hairston is a leading Mortgage Broker with Texas Mortgage IQ in Austin. To take advantage of stellar rates, call 512-472-3500 or email mark@texasmortgageiq.com