Lending Update: Loan Limits Increased for 2018

Lending Update: Loan Limits Increased for 2018

In response to rising home prices across the nation, the Federal Housing Finance Agency has increased Fannie Mae and Freddie Mac‘s conforming loan limits for the second year in a row. In most communities in the U.S., the new loan limit for one-unit properties will be $453,100, up from $424,100, (an almost 7 percent increase over 2017). The increase will be effective for loans sold to these agencies after January 1, 2018. The change comes after market shifts which have caused median home values to “generally increase,” according to the FHFA. Additional adjustments have been made to high-cost areas, putting the new conforming limit for these locations at...
New Lending Rules: Understanding ‘TRID’

New Lending Rules: Understanding ‘TRID’

On Oct. 3, a major change will take place in the home-buying process. That’s when the new federal lending regulation known as the “TILA-RESPA Integrated Disclosure” goes into effect. You’ll probably hear it referred to around here as simply “TRID.” And many in the industry are saying that TRID will redefine residential real estate lending and the process for closing residential purchases requiring loans. But what exactly is it? In a nutshell, TRID primarily does two things: It clarifies and consolidates several of the required loan documents; and it changes the timing of some activities of a home-buying transaction. In the process, it also potentially wreaks havoc with the closing-process timeline. But I’m getting ahead of myself. About the TRID TRID is one component of the federal Consumer Financial Protection Bureau’s “Know Before You Owe” mortgage initiative, designed to empower consumers with the information they need to make informed mortgage choices. Back in 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act paved the way for the Consumer Financial Protection Bureau (CFPB), an independent regulatory agency charged with overseeing financial products and services that are offered to U.S. consumers. Three years later, the CFPB released its mammoth 1,800-page rule/regulations. (Ironically, the goal of the lengthy edict was to “simplify” the disclosures for home buyers and home sellers.) One of the CFPB’s tasks was to integrate the mortgage loan disclosures required under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). Up until now, borrowers have received two separate forms from their lender at the beginning of their purchase transaction: the RESPA-required “Good Faith Estimate” (GFE)...

Mortgage Rates on the Rise

If you’ve been actively looking to buy a home in the past few months, you probably noticed a significant change recently: Mortgage interest rates have gone up — way up. At the end of May, local lenders were quoting a rate of approximately 3.875 percent for a 30-year fixed rate loan; today, that same loan has a rate of about 4.625 percent. Why? According to a recent Inman News article, you can blame the Federal Reserve. Rates started climbing slowly in mid-May on speculation that the Federal Reserve was preparing to trim the $85 billion-per-month bond purchase program that has long kept a lid on rates, says Bankrate.com’s  Polyana da Costa: “When the Federal Open Market Committee wrapped up its recent meeting, many observers expected the Fed to calm the markets. Instead, the Fed did the opposite.” Consequently, mortgage rates rose by their largest weekly margin since 1987, according to Freddie Mac. It was Fed chief Bernanke’s remarks on June 19th about the possible timing of reduced bond purchases that got the financial world’s attention: First, Treasury bond yields jumped over the week, and then mortgage rates followed, said Frank Nothaft, vice president and chief economist at Freddie Mac, in a statement. He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014. “Higher mortgage rates may dampen some housing market activity, but the effect will be muted by the high level of buyer affordability, and home sales should remain strong,” Nothaft stated. “For instance, existing-home sales in May rose to its strongest pace since November 2009, and new-home sales were...

New Loan Program for Central Oregon Home Buyers

A new loan program recently announced by Bank of the Cascades was developed to address the needs of Central Oregon residents who have lost their homes or filed for bankruptcy as a result of job loss, medical expenses or other related circumstances.  The goal of  the “New Beginnings Home Lending Program”: providing home loans to qualified borrowers whose credit has been damaged as a result of the recent economic crisis. To be eligible for a New Beginnings Home Loan, applicants must have experienced foreclosure, bankruptcy, deed in lieu of foreclose or a short sale that negatively impacted their credit, as a result of job loss, loss of income, underemployment after job loss, reduction of wages or hours, a medical or health-related event or the death of a primary wage earner between Jan. 1, 2007 and Dec. 31, 2012. Terry Zink, president and CEO for Bank of the Cascades, says the program was created to provide a second chance for Central Oregonians. According to Zink, local residents should be the first to benefit from the bank’s recent return to profitability. A New Beginnings loan can total up to $417,000 and is based on adjustable interest rates. The loans will only apply to single family, owner-occupied residences. Second homes, multi-family homes, prefabricated or modular homes and investment properties aren’t eligible for financing through this program. For more information,  call 541-...
Tips for Living Through a Bad Appraisal (hint: it’s no fun)

Tips for Living Through a Bad Appraisal (hint: it’s no fun)

We’ve been reading a lot about how low appraisals are slowing the housing market recovery — everyone from the Wall Street Journal and the LA Times to Smart Money magazine and the National Association of Realtors has addressed the issue. Well, I recently experienced the problem firsthand, with clients purchasing a home in Sisters, and it was a nightmare. Luckily, the buyers and sellers were able to come to an equitable compromise themselves. If they hadn’t, this single issue would have derailed the purchase. Here’s the big-picture problem at hand: Our real estate market is evolving (shifting from declining to improving), which makes it more difficult to accurately calculate a home’s value — especially in smaller markets with fewer sales, like Sisters. Combine that with an extremely conservative lending environment very hesitant to take any financial risks plus new lending-industry regulations (which were designed to benefit home buyers but that often have the opposite effect), and you have the perfect appraisal-disaster storm. Actually, the problem my clients faced wasn’t a low appraisal (when a well-documented value comes in lower than the agreed-upon purchase price) but a bad appraisal (a value that cannot be justified). The appraiser hired by their lender (one of the big guns) made several key errors. First, she used an incorrect purchase price as her basis, which was (by coincidence?) identical to the appraised value she ultimately arrived at. She also claimed the Sisters market was declining by 4 percent and subsequently devalued every comparable sale used by 4 percent. Ouch. Now, you’d think this problem would be simple enough to rectify. And we did, in fact, submit...
Deschutes County Receives High Marks from Major Lender

Deschutes County Receives High Marks from Major Lender

A recent discussion with one of the mortgage loan officers I work with revealed an interesting tidbit. The bank keeps tabs on the various real estate markets within each state and categorizes them in one of five levels. To arrive at those levels, the bank ranks each location based on three factors: (1) days on market; (2.) price stabilization; and (3) supply vs. demand. In an area with the top-level rating, potential borrowers have at their disposal the maximum loan options that this bank offers. On the other hand,  a region rated at the lower levels is considered a soft market and may have tighter loan parameters. Turns out that our fair state has an overall good rating; and right now, Deschutes is the only county in Oregon that holds the highest-level rating. That’s good news for folks wanting to buy property in Bend, Sisters or Redmond. It’s also yet another indication that our market is on the upswing. About the Author Lisa Broadwater, GRI, CDPE, is a Central Oregon-based real estate professional who specializes in listing and selling homes, especially in Sisters, Tumalo, Bend and...

Banking on BOTC: Local Lender Expresses Renewed Commitment to Home Loans

Earlier this week, my RE/MAX office met with Ellen Silfven & Davina Luz of Bank of the Cascades (BOTC). The duo was there to discuss BOTC’s home loan program. The timing of the meeting was no coincidence: Just a few weeks ago, new president/CEO Terry Zink made a very public $1 billion commitment to making loans available to business owners and individuals in the bank’s Oregon and Idaho markets over the next three years. As Zink pointed out, a community bank should invest in its communities, and we couldn’t agree more. Here in Sisters, we’re all ears when it comes to local lending -– we strive to offer our customers as many local home-loan options as possible. So it was encouraging to hear the information that Luz and Silfven shared. Luz, manager of the Sisters BOTC branch, and Silfven, a mortgage loan officer based in BOTC’s downtown Bend office, echoed Zink’s commitment to ramping up its ability to provide competitive loan programs. That’s welcome news for Central Oregon home buyers. BOTC’s rates are currently very competitive: 4% for 30-year fixed-rate mortgage and 3.25% for a 15-year fixed-rate mortgage. With that, there are no additional points, and BOTC’s processing fee is a flat $495. There are other pluses to the BOTC product: According to Silfven, BOTC is servicing its home loans and plans to continue to do so. Another benefit is the home-loan officers’ proximity to the loan underwriter: just down the hall. Having direct access to the underwriter can be critical in closing a loan that has a strict timeline. Also, having that ability to easily communicate with the...

Improvements to the HARP Refinance Program are On the Way

Yesterday, in an effort to enable more borrowers to refinance their home mortgages, the Federal Housing Finance Agency, along with Fannie Mae and Freddie Mac (the Enterprises), announced several changes to the Home Affordable Refinance Program (HARP) . The program enhancements were developed at FHFA’s direction with input from lenders, mortgage insurers and other industry participants. New program enhancements include the following changes: Certain risk-based fees for borrowers who refinance into shorter-term mortgages will be eliminated and certain fees for other borrowers will be lowered; The 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac will be removed; Certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac will be waived;  A property appraisal  will  no longer need to be done where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and The end date for HARP has been extended until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009. An important element of these changes is the encouragement, through the elimination of certain risk-based fees, for borrowers to use HARP to refinance into shorter-term mortgages. Borrowers who owe more on their house than the house is worth will be able to reduce the balance owed much faster if they take advantage of today’s low interest rates by shortening the term of their mortgage. Operational details about the HARP changes should be provided to mortgage lenders and servicers by Nov. 15. Since industry participation in HARP is not mandatory, implementation schedules will vary...