Tag Archives: Fannie Mae

housing.prices

Bill aims to create new housing-loan structure

The top Democrat on the U.S. House Financial Services Committee on Thursday introduced a draft proposal to abolish Fannie Mae and Freddie Mac and create a new lender-owned cooperative that would issue government-backed loans.

Representative Maxine Waters of California outlined a measure that challenges the more conservative approach of the panel’s chairman. Texas Republican Jeb Hensarling’s proposal would sharply reduce the government’s role in housing finance.

The counterproposal is unlikely to gain broad support in the Republican-led House.

“Fannie Mae and Freddie Mac’s return to profitability and repayment of taxpayer dollars has led some to rightly speculate whether (they) need any reform at all,” Waters said in a statement. “I am hopeful that this legislation will continue to move the conversation on housing finance reform forward.”

The House bill maintains a clear government role is needed to sustain the popular 30-year, fixed-rate mortgage. The framework takes a similar approach to bipartisan measures already introduced in the Senate.

The most significant piece of housing finance legislation was introduced earlier this month by the Democratic chairman of the Senate Banking Committee, Tim Johnson, and the panel’s top Republican, Mike Crapo.

Fannie Mae and Freddie Mac, the two leading sources of U.S. mortgage funds, were seized by the government during the financial crisis in 2008 and propped up with $187.5 billion in taxpayer funds to keep them solvent.

By the end of March the companies will have sent the Treasury $202.9 billion in dividends.

Fannie and Freddie ensure the mortgage market stays liquid by buying loans from lenders and repackaging them as securities that they sell to investors with a guarantee.

The House plan written by Waters includes a government guarantee for home loans and creates a lender-owned cooperative that will issue mortgage-backed securities eligible to receive federal insurance. This structure would replace Fannie and Freddie, which would be liquidated over a five-year period.

It creates an explicit government guarantee, paid for by the industry and used to capitalize an insurance fund that is tapped in times of financial crisis.

The plan also would give small banks direct access to the financing for their home loans and ensure they are not shut out by larger competitors. It provides sources of funding for affordable housing.

With midterm elections approaching in November, House and Senate lawmakers are expected to turn to the campaign trail within a few months, leaving little time to deal with the complex issue of revamping the U.S. housing finance system.

green-house

Getting to know ‘Green Mortgages’

The Energy Efficient Mortgage (EEM) is a relatively new home financing option that nearly every home buyer can take advantage of. Thousands of home buyers across the U.S. are recognizing the benefits that this new mortgage option provides. Recognizing the obvious benefits of having an energy efficient home, more and more home buyers are utilizing this unique financing tool in order to increase their home’s energy efficiency and lower their electric bills.

How Does an EEM Work?

An Energy Efficient Mortgage allows home buyers to qualify for larger home mortgage loans than they would have been qualified for otherwise. EEM’s provide home buyers with excess funds to install energy efficient upgrades to their new home, thus making their homes more environmentally friendly and reducing their energy bills. Getting an EEM is a terrific way for home buyers to save money month after month while doing their part to decrease their impact on the environment at the same time.

Different Kinds of EEM

There are different kinds of EEM’s to choose from and securing one is easier than many home buyers might believe. Known as “green” mortgages, most mortgage lenders offer three different types of EEM’s:

  • Conventional EEM: Most lenders who sell their loans to either Fannie Mae or Freddie Mac offer conventional EEM’s to new home buyers. This type of EEM allows homebuyers to borrow the appraised value of their home plus an additional 15% in order to make energy efficient home improvements.
  • FHA EEM: A Federal Housing Administration EEM allows home buyers to borrow the appraised value of their home plus at least an additional $4,000-$8,000 or 5% of their home’s appraisal value, whichever amount is less. This type of EEM may provide a lower mortgage than a conventional EEM, but it gives home buyers access to the FHA’s wide range of financing options.
  • VA EEM: A Veteran’s Association EEM is very similar to an FHA EEM, but only past and present military personnel may take advantage of this particular mortgage option. Unlike an FHA EEM, a VA EEM grants a fixed amount of $6,000 regardless of the home’s appraisal value.

What Does an EEM Pay For?

The additional money from an EEM is intended to be used only for energy saving improvements. Most homes lose their energy efficiency through improper insulation and cracks that allow hot or cold air to penetrate the home. Therefore, the additional funds received from an EEM usually go towards air sealing and insulation improvements.

In some instances, roof or chimney repairs, energy efficient windows, and new air conditioning systems can be covered by an EEM. In other cases, energy generation equipment, such as solar panels, can be added with EEM funds. However, these improvements usually cost more than the additional funds included in an EEM. Unfortunately, in most cases homebuyers cannot use the money from an EEM to choose what improvements they would like to undertake. All improvements made using an EEM must be suggested by the inspector in their HERS report.

Qualifying For a Green Mortgage

Most mortgage lenders work with secondary mortgage markets and insured programs like Fannie Mae and the FHA in order to provide EEM’s for their clients. Most EEM’s will differ from lender to lender, therefore prospective home buyers should talk to many lenders in order to find the EEM that is best for them. Qualifying for an EEM is simple and rarely a concern. Most homebuyers who qualify for a traditional mortgage qualify for an EEM as well. The only requirement needed to include an EEM with the traditional mortgage is making sure the improvements are cost effective. For example, if new energy efficient windows will cost $5,000 to install, then the energy savings from the new windows must be projected to at least equal the $5,000 it cost to install the windows.

This is where the HERS report becomes significant. For homebuyers of existing homes to qualify for an EEM, the energy-saving improvements must be verified by the HERS report. The report includes the current state of the home’s insulation, windows, and appliances, as well as the area’s climate and utility rates. It then details recommended improvements, the cost of the improvements, and the annual savings as a result of having the improvements done. Finally, the HERS report must state that having the improvements done will save the homebuyers money on their utility bills.

Surprisingly, buyers of new construction homes can also qualify for an EEM. The only requirement for buyers of newly constructed homes to enjoy the added benefit of an EEM is to have the builder certify that the home meets energy efficiency guidelines.

Energy Efficient Mortgages provide any home buyer the ability to have access to additional funds for making cost-saving improvements to their new home. Rather than having to use their savings, credit cards, or non-traditional funding with high interest rates, home buyers can have access to additional funds at the same low interest rate of a mortgage and make a single mortgage payment each month. With so many benefits and no apparent downside, it is not surprising that more and more home buyers are taking advantage of this wonderful opportunity.

 

Brentt Taylor writes for Mortgage Loan, which is established year 1995 and owned by Mortgageloan Directories and Information LLC. The site provides information, tools and up-to-date news about mortgage and financial-related matters. The site aims to empower consumers create smart and better financial decision for themselves and for their families. MortgageLoan has written a complete guide about Green Mortgages, for more information visit their site.

green-house

Getting to know 'Green Mortgages'

The Energy Efficient Mortgage (EEM) is a relatively new home financing option that nearly every home buyer can take advantage of. Thousands of home buyers across the U.S. are recognizing the benefits that this new mortgage option provides. Recognizing the obvious benefits of having an energy efficient home, more and more home buyers are utilizing this unique financing tool in order to increase their home’s energy efficiency and lower their electric bills.

How Does an EEM Work?

An Energy Efficient Mortgage allows home buyers to qualify for larger home mortgage loans than they would have been qualified for otherwise. EEM’s provide home buyers with excess funds to install energy efficient upgrades to their new home, thus making their homes more environmentally friendly and reducing their energy bills. Getting an EEM is a terrific way for home buyers to save money month after month while doing their part to decrease their impact on the environment at the same time.

Different Kinds of EEM

There are different kinds of EEM’s to choose from and securing one is easier than many home buyers might believe. Known as “green” mortgages, most mortgage lenders offer three different types of EEM’s:

  • Conventional EEM: Most lenders who sell their loans to either Fannie Mae or Freddie Mac offer conventional EEM’s to new home buyers. This type of EEM allows homebuyers to borrow the appraised value of their home plus an additional 15% in order to make energy efficient home improvements.
  • FHA EEM: A Federal Housing Administration EEM allows home buyers to borrow the appraised value of their home plus at least an additional $4,000-$8,000 or 5% of their home’s appraisal value, whichever amount is less. This type of EEM may provide a lower mortgage than a conventional EEM, but it gives home buyers access to the FHA’s wide range of financing options.
  • VA EEM: A Veteran’s Association EEM is very similar to an FHA EEM, but only past and present military personnel may take advantage of this particular mortgage option. Unlike an FHA EEM, a VA EEM grants a fixed amount of $6,000 regardless of the home’s appraisal value.

What Does an EEM Pay For?

The additional money from an EEM is intended to be used only for energy saving improvements. Most homes lose their energy efficiency through improper insulation and cracks that allow hot or cold air to penetrate the home. Therefore, the additional funds received from an EEM usually go towards air sealing and insulation improvements.

In some instances, roof or chimney repairs, energy efficient windows, and new air conditioning systems can be covered by an EEM. In other cases, energy generation equipment, such as solar panels, can be added with EEM funds. However, these improvements usually cost more than the additional funds included in an EEM. Unfortunately, in most cases homebuyers cannot use the money from an EEM to choose what improvements they would like to undertake. All improvements made using an EEM must be suggested by the inspector in their HERS report.

Qualifying For a Green Mortgage

Most mortgage lenders work with secondary mortgage markets and insured programs like Fannie Mae and the FHA in order to provide EEM’s for their clients. Most EEM’s will differ from lender to lender, therefore prospective home buyers should talk to many lenders in order to find the EEM that is best for them. Qualifying for an EEM is simple and rarely a concern. Most homebuyers who qualify for a traditional mortgage qualify for an EEM as well. The only requirement needed to include an EEM with the traditional mortgage is making sure the improvements are cost effective. For example, if new energy efficient windows will cost $5,000 to install, then the energy savings from the new windows must be projected to at least equal the $5,000 it cost to install the windows.

This is where the HERS report becomes significant. For homebuyers of existing homes to qualify for an EEM, the energy-saving improvements must be verified by the HERS report. The report includes the current state of the home’s insulation, windows, and appliances, as well as the area’s climate and utility rates. It then details recommended improvements, the cost of the improvements, and the annual savings as a result of having the improvements done. Finally, the HERS report must state that having the improvements done will save the homebuyers money on their utility bills.

Surprisingly, buyers of new construction homes can also qualify for an EEM. The only requirement for buyers of newly constructed homes to enjoy the added benefit of an EEM is to have the builder certify that the home meets energy efficiency guidelines.

Energy Efficient Mortgages provide any home buyer the ability to have access to additional funds for making cost-saving improvements to their new home. Rather than having to use their savings, credit cards, or non-traditional funding with high interest rates, home buyers can have access to additional funds at the same low interest rate of a mortgage and make a single mortgage payment each month. With so many benefits and no apparent downside, it is not surprising that more and more home buyers are taking advantage of this wonderful opportunity.

 

Brentt Taylor writes for Mortgage Loan, which is established year 1995 and owned by Mortgageloan Directories and Information LLC. The site provides information, tools and up-to-date news about mortgage and financial-related matters. The site aims to empower consumers create smart and better financial decision for themselves and for their families. MortgageLoan has written a complete guide about Green Mortgages, for more information visit their site.

homebuyers - Arizona Business Magazine May/June 2012

Homebuyers Bounce Back

The rules have changed a bit, but it’s still a perfect time to purchase a home.

If you have good credit and a good job history and can put money down for a house, it’s a great time to buy, say experts in real estate and finance. In fact, the sooner the better, because it may soon turn into a seller’s market for housing.

And mortgage rates could be climbing as well. Mortgage buyer Freddie Mac recently announced that the average rate on 30-year loans had jumped to the 4 percent level for the first time in three months.

According to attorney Kevin Nelson of Tiffany & Bosco, whose practice focuses on mortgage and real estate, homebuyers can get very attractive packages if they have the solid down payments and credit. “Homeowners can also refinance if they have substantial value in their homes. But lenders are still very cautious about permitting homeowners to have lines of credit,” Nelson says. “And they probably still will be until the financial problems in Europe and unrest in the Middle East calm down.”

Both larger banks and mortgage companies say business is very good. “In the past 10 years, we have never done as many loans per month as we are doing right now,” says Tim Disbrow, regional sales manager for Wells Fargo Bank. “We are the No. 1 lender by a longshot for all mortgages across the state, including Fannie and Freddie and FHA.”

Although some in the lending industry say big banks are moving very slowly in making home loans and can’t keep up with the volume, Disbrow disputed that. “Consumers who go to banks for mortgages are just being asked to document their savings, job history and salaries, something that they weren’t asked to do in the boom years,” he says.

The same rules apply with all lenders now, he says, whether they are banks or mortgage companies. Customers everywhere have to meet the same requirements based on Fannie and Freddie guidelines.

For conventional conforming mortgages of $417,000 or less that are insured by Fannie Mae and Freddie Mac, down payments must be 5 percent or more. Down payments for FHA loans are 3.5 percent. Jumbo loans also seem to be widely available, but lenders generally do not sell them to Fannie Mae and Freddie.

“The big difference between us and mortgage companies is that customers may have to pay other loan originators more in fees,” Disbrow says.

Foreigners are helping fuel the rising demand for homes in the Phoenix area, but plenty of Americans are buying as well. Canada, New Zealand and Australia are well represented. Many foreign buyers pay cash, but some mortgage companies offer loan programs for them. Buyers are often investors attracted to the housing market by low home prices and the potential for high rents.

Eric Bowlby, president of AmeriFirst Financial in Mesa, estimated that about 40 percent of the homebuyers in Maricopa County are cash buyers, while 60 percent get mortgages.

Surprisingly, even those who lost their homes in a foreclosure or short sale can finance homes with mortgages, but they must put down fairly substantial down payments. They can even get an FHA-insured loan from three to five years after losing their previous home.

But to get a Fannie Mae-backed mortgage or one from Freddie Mac, someone who had a foreclosure has to wait from five to seven years. However, if a buyer can verify that some hardship led him or her to walk away from their property – like the loss of a job or an illness – they may get relief from the time requirements.

According to Bowlby, even if someone was upside down in their mortgage and walked away, AmeriFirst has a hard money hedge fund that will finance mortgages almost immediately for those who have the income to qualify and make a 25 percent down payment.

“Even those who are one day out of foreclosure or bankruptcy may be able to qualify,” he says, “but the interest rate is 12 percent.

The rate may be high, he says, but it’s still cheaper to buy than to rent because of the homeowner’s tax deduction and the current increases in rental rates.

ATTRACTING BUYERS

Recently, Wells Fargo announced that it is bringing a new pilot program to Phoenix in an effort to help stabilize housing markets.

The Neighborhood LIFT program, already available in Atlanta and Los Angeles, is designed to help communities attract qualified prospective homebuyers to neighborhoods that are struggling with high inventories of unsold homes.

In Phoenix, the bank has a five-year goal of making $3 billion in such loans. Prospective homebuyers can qualify for down payment assistance grants of up to $15,000, covering home and renovation financing and will also participate in home buyer seminars and tours of properties for sale. There are limits on the amount of income families can have and limits on the size of loans.

Arizona Business Magazine May/June 2012

 

Mi Casa, Su Casa

Protecting Your Mexican Real Estate Investment

Mi Casa, Su Casa

Protecting your Mexican
real estate investment

By David M. Brown

Contrary to what you may have heard, Americans, or any non-Mexican nationals, can purchase property fee simple (or direct deed) in Mexico except when the property is in the restricted zone: 32 miles from the shoreline or 62.5 miles from the border.

mi_casaHowever, buyers can acquire coastal and border-area properties in the restricted zone by establishing a Mexican Bank Trust, or fideicomiso. The bank, as trustee, charges an annual service fee and holds the legal title to the property for up to 50 years. For less than $1,000, the potential buyers register for a permit to establish the trust at the Secretariat de Relaciones Exteriores. The permit issued, a notario prepares the deed or “escritura.” After acquisition taxes and filing fees are paid, the deed is recorded.

Unlike the English common-law based American system, Mexican law is a civil law system and therefore heavily codified. However, it is specific regarding fee-simple ownership. The Foreign Investment Law of Mexico (FIL), established in 1971 and amended twice since, explains what properties must be in a “fideicomiso” and what properties are nonresidential and therefore can be purchased by foreigners in a Mexican corporation, explains Mitch Creekmore, director of business development for the Mexico Division of Stewart Title Guaranty Company in Houston.

As beneficiary of the 50-year fideicomiso, the buyer can basically do what he or she wants: Improve it, lease it, sell it, mortgage it, will it. Your estate becomes the beneficiary, and you or the estate can indefinitely extend the trust in 50-year periods. Buyers of a property already in a fideicomiso can begin a new 50-year cycle.

Dinero is spoken here
Don’t worry about financing either. Although most purchases of Mexican real estate by Americans have traditionally been cash deals, through home equity loans on a primary residence, or through private lenders, a growing number of developers are becoming involved in financing. In addition, third-party lenders in the United States are available, often accepting as little as 20 percent down on a purchase.

One of these lenders is the International Mortgage and Investment Group, based in Phoenix with offices in Austin and New York. Led by Timothy K. Kelley and Kevin Hardin, the IMI Group is helping to solve the former challenges of securing financing for property in Mexico. “In the past year and a half, there have been entities that have lent private-equity money to individuals buying homes,” says Hardin, the company’s CEO and a certified mortgage banker and certified mortgage consultant who has placed more than $10 billion in mortgages into the secondary market.

“Right now our biggest initiative is to educate people on either side of the transaction,” adds Kelley, a native Phoenician who learned about the Mexican industry by living and working in Mexico City for 10 years before returning to Arizona.

In addition, the men are working to establish a sound secondary market for selling Mexican-based mortgages. By providing a dependable means by which existing mortgages can be sold, more capital will be freed for new buyers, creating what Hardin calls a “free-flowing market.”

The IMI Group is also leading a nationwide effort to create an International Mortgage Lenders Association to represent individuals and entities involved in or related to the business of lending money to Americans buying property in Mexico. The men are working with stakeholders such as the Arizona Mexico Commission, the National Law Center for Inter-American Free Trade and financial-industry players such as GMAC-RFC, Stewart Title, Collateral International and M&I Bank.

Both men agree that the process for financing property in Mexico is much more accessible than it was even a few years ago. “It’s identical to the U.S. mortgage process, much like a Fannie Mae structure, in U.S. dollars, with a U.S. company, a U.S. escrow agent, and with a high level of confidence.” Similarly, title insurance policies are almost identical to those issued for American properties.

Get good counsel
Most importantly, when buying property in Mexico, have the right information and the right counseling, specifically with professionals who have experience on cross-border matters.

“More and more, the practice of law in Mexico is resembling the practice of law in the United States,” explains Benjamin Aguilera, an attorney with the Phoenix office of Greenberg Traurig. The reason for this, of course, is that so much of the capital is from the United States, though a U.S. attorney must still be familiar with the proper documentation in order to comply both systems.

Aguilera underscores: “There is no single glove that will fit every transaction.” Different states, for instance, may have different laws. “Despite the proximity, the ease of traveling, the appeal and allure of doing business in Mexico, it is a different country with very stringent laws and its own judicial system.”

AZ Business MagazineHe offers a few caveats: “Don’t eschew common sense in your south-of-the-border transaction. Don’t do in Mexico what you wouldn’t do here.” Furthermore, just being able to habla espanol isn’t enough. “It involves being knowledgeable of the interrelation of the two legal systems, the protocol for doing business, the nuances of the spoken and body languages and the financial effects on both sides of the border,” he says.

www.gtlaw.com
www.gotosonora.com

 

 

 

Arizona Business Magazine Aug/Sept 2006

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