MarkAfman.com

Great News for 1st Time Buyers

Mark Afman — Thu, 04 Feb 2010 18:36:00 +0000

This past Monday, I attended a webinar on a new program that has been rolled out by CHFA (Colorado Housing Finance Authority). Well it’s sorta new. It is actually the old MRB FirstStep program taken off the shelf, dusted off, and put back on the market. If you are familiar with CHFA then you may remember back when the first time buyer program from CHFA had very competitive rates. Sometimes they were even better then regular FHA rates. Then the mortgage industry blew up and the bond market took a hit the the source of funding for that program (Mortgage Revenue Bonds) went away. When that happened, CHFA rates went sky high. So about a year ago CHFA did some revamping of their programs offerings and they were able to bring their rates down to a reasonable level for buyers that needed the down payment assistance that CHFA is so famous for.

Well now the Mortgage Revenue Bonds are back in vogue and therefore, CHFA is able to bring back this program. This is for first time buyers only and the income restrictions are a little tighter then the program that they have been using for the last year but the interest rates are about 1/2% better. Today (2/04/2010) on the CHFA website, the FirstStep program with the 2nd loan for down payment, had a published interest rate of 5.25%. That is the rate on both the FHA 1st and the small 2nd (equal to 3% of the 1st loan amount). Both are 30 year fixed loans with no prepay penalties. As a Buyer, you still have to put a minimum of $1,000 into the transaction and needs to take a first time buyers class. The class is free and can be taken online or in a classroom setting.

So with this program available and the $8,000 tax credit out there for first time buyers (under contract by April 30 and close by the end of June), this would be an excellent time to contact a CHFA certified lender (or I can help you to) to see what you might qualify for and then contact your Realtor and start looking at houses.

If you have any questions about CHFA you can call me or go to www.chfainfo.com

Let me know when I can help or if I can answer any questions. Mark

Also, if you are attending the Realtor Rally and want to learn more about FHA, CHFA, and the lending industry in general, I am teaching 2 classes. One is at 11:15 on the state of the lending industry and the other is at 1 on the new issues and updates regarding FHA loans. I hope to see you there.

A great site for all things REAL ESTATE is www.insiderealestatenews.com This is edited by John Rebchook, formerly of the Rocky Mtn News.

FHA Updates and Issues 1/28/2010

Mark Afman — Thu, 28 Jan 2010 20:16:28 +0000

By now you may know that FHA is waiving the 90 day flip rule as of February 1st, 2010. Remember that there are a few restrictions: 1) It is only a 1 year waiver of this rule to try to help move inventory. 2) If the sales price is 20% higher then the sellers acquisition costs, then the seller has to justify the increase with a list of improvements or if there are no improvements made, the appraiser has to explain the increase. 3) It has to be an arm’s length transaction with no interested parties buying and selling.

In one of my previous updates, I mentioned that FHA was considering several options to try to shore up their risk management. So it is no surprise that you may have heard all kinds of rumors out there about FHA loans raising the mortgage insurance, lowering the down payment to 5%, lowering the amount of seller concessions, and imposing a minimum FICO score. Some of this is fact and some of it is not quite fact…yet. The fact is that the Up Front MIP will go up to 2.25%, from 1.75%, for case numbers assigned on or after April 5, 2010. The monthly MI will not change. The other change really should not affect anything, but a buyer now has to have a FICO score of at least 580 to be able to use the 3.5% down payment. If it is under 580 then the down payment will be 10%. However, to my knowledge, there is not an investor out there that will even allow a minimum score below 580. CHFA allows down to 580, as of right now anyway. But all of the other main investors that I am aware of require a minimum of 620 and there is even one that has a 640 minimum.

The other items I mentioned above may still be under consideration but have not been decided on and I believe that FHA will wait to see if these current actions will help them with their risk management before they go too crazy with those other ideas. But you never know. I will keep you up to date if and when things change.

Let me know when I can help or if I can answer any questions. Thank you, Mark

A great site for all things REAL ESTATE is www.insiderealestatenews.com This is edited by John Rebchook, formerly of the Rocky Mtn News.

Suggestion for Selling Your Condo

Mark Afman — Wed, 09 Dec 2009 16:28:49 +0000

As I have mentioned before in one of my updates, selling a condo just got a lot harder because of the new FHA guidelines that require all condo projects to be approved or re-approved as of yesterday. The only way around this is if the project was approved in the last 12 months or if it is a HUD owned property. HUD apparently does not seem to think they need to play by the same rules. Anyway, spot approvals are still allowed up to February 1, 2010 but here is a suggestion to you if you are thinking of selling your condo. Check with an FHA lender to see if the project was approved in the last 12 months. If not, then maybe you would to consider taking it upon yourself to get the proper documentation together to try to get it approved (or have your HOA do it) . The cost could be up into the $400 to $600 range and will require the HOA to fill out a questionnaire and getting some other documentation together, and then it will need to be submitted to FHA for approval. First of all the buyers are not allowed to pay for this process and if you wait until an offer comes in, it might take too long to get it done in time for a closing. In addition, you may be waiting for an offer that never comes in because if the project is not FHA approved then no FHA qualified buyers will likely make an offer in the first place. FHA loans make up a very large portion of the marketplace right now and you as the seller may be cutting yourself off from that portion of the market unless steps are taken to get a project approved up front.There is at least one consultant in town that I know of that will do all of this for you at a fee of around $300 to $400 and then the HOA may charge a fee to fill out the questionnaire.

One more thing, this does not apply to Townhomes with a lot and block legal description.

I know that you may be thinking that this is a lender responsibility but we will only do a loan based on the FHA approval status and we are not compelled to get that approval done. We will facilitate getting it done but from a practical standpoint it just makes sense to get the approvals done up front before the property is on the market.

So if you are considering putting your condo on the market, check out the current status and then consider helping get your project approved up front.

Let me know if you have any questions or comments. Mark

I would also like to ask a favor. I did a loan for a military veteran awhile back and he just got back here to Denver from active duty in Afghanistan. He needs to find employment and is extremely good at anything to do with administration. If you think you may know of a connection for him, please let me know and thank you.

A great site for all things REAL ESTATE is www.insiderealestatenews.com This is edited by John Rebchook, formerly of the Rocky Mtn News.

Tax Credit and CHFA Update

Mark Afman — Tue, 24 Nov 2009 18:31:20 +0000

Well my last update told you that the IRS tax credit has been extended and expanded to include non-first time buyers. I do have one correction. I reported that the $6,500 for “move-up” buyers went into affect on December 1 but it actually went into affect the moment that the President signed the bill. So if you have bought a house that closed since November 6, Then you can get an extra $6,500 for the trouble.

CHFA has also extended it’s Jumpstart program so that first time buyers can still take advantage of getting their FHA downpayment covered with a loan that is equal to 3.5% of the purchase price but there will be no interest or payments charged as long as the loan is paid off by February 1, 2011. This assumes, of course, that once the buyer gets their $8,000 tax credit (or 10% of the purchase price, whichever is less), they will pay off that CHFA 2nd loan. If they do not pay it off by February 1, 2011 then CHFA will start charging monthly payments at 8% and the payoff term is over 10 years, not 30 years so there is a good incentive to pay that off by February 1, 2011.

At any rate, this is a great way to help a first timer with little money to get into a home and not have them worry about having a payment on that 2nd loan. Unfortunately, this program is not allowed to be used by the so called “move-up” buyers. By the way, That term is a little bit deceiving. Any buyer that owned a home and buys another home may be eligible for the $6,500, not just “move-up” buyers assuming they meet all of the criteria.

CHFA still has very lenient income limits, as high as $87,400 on this Jumpstart program and $98,800 on the regular CHFA Homeopener program. The purchase limits are up to $324,300.

CHFA still requires the buyer to put a minimum of $1,000 in to the transaction and each person on the loan will have to attend a first time buyers class which can be taken in a classroom setting or on-line. For more info on all the CHFA programs go to www.CHFAinfo.com or give me a call. I will be happy to answer any questions.

If you are a REALTOR and you want more in depth awareness of what is going on in the Mortgage industry, consider attending a 2 hour workshop that I am presenting on December 2 from 12-2pm at the Denver Board of Realtors. This will cover new tighter underwriting guidelines, FHA Condo Approvals, the new RESPA/TILA laws, and much more. Call the DBR at 303-300-8500 to register.

A great site for all things REAL ESTATE is www.insiderealestatenews.com This is edited by John Rebchook, formerly of the Rocky Mtn News.

Let me know if you have any questions. Mark Afman

President signs new tax credit extention into law.

Mark Afman — Fri, 06 Nov 2009 18:26:26 +0000

Here is what we have just learned regarding the home buyers tax credit. The House passed the unemployment extension bill yesterday after Senate did the day before which includes the extension and expansion of the tax credit. The President signed the bill into law this morning. Here are some of the details.

· First-time homebuyers will continue at $8,000

· Tax credit for “move up” purchasers will be up to $6,500

o Must have used previous home as a principal residence for 5 consecutive years of the previous 8. This means that if a buyer owned a home for 5 years but has rented for the last 2 years, they are eligible.

· Income limits increased and are the same for first-time and “move up” purchasers: $125,000 for single filers/$225,000 for joint filers

· Limitation on eligible home prices has been increased to $800,000

· Time Frame: December 1, 2009 to April 30, 2010 plus 60 day extension if binding contract is in place by April 30, 2010

· Anti-fraud measures have been added.

If you have any questions, feel free to contact me.

Thank you, Mark Afman,

Ever Have One Of Those Days?

Mark Afman — Fri, 06 Nov 2009 03:55:00 +0000

I am having one of those days today. I have a few loans that are trying to get closed for November. I am confident that the $8,000 tax credit will be extended in some form and the President will sign it but most first time buyers made plans to close by the end of this month and so there are several files that are in our system to do exactly that. So where is the Bad Day part coming in? Well, underwriting is getting tougher and tougher. New income guidelines are bringing down the allowable income that we can use. The minimum Credit scores are going up. One of our investors now requires a 640 minimum score for both FHA and Conventional loans, Asset verification guidelines are adding more and more rules to what the buyers need to provide to prove they have the money. We still don’t know how FHA and Fannie Freddie condo approvals will work and who knows how HUD homes are being valuated?

We are being told to look at a loan file to see if it makes sense. Well the problem is that what made sense a year ago isn’t making sense now.

Ok so enough venting. Why am I sharing this with you? I just want you to know that your lender is not there to make sure the loan gets done no matter what. Those days are long gone. Be patient with us. We are working hard to try to get your deals done but sometimes a problem comes up on a new guideline and that deal of your’s might be denied. Plenty of loans are being approved and closed but a few more then you are probably used to are being denied. Try to make sure that you are working with a Lender with some experience and is staying on top of the changes as much as they can. There are more deals out there now then there have been for awhile but more of them may not qualify.

There, I feel better already.

Let me know if you have any questions, Mark Afman

Also please visit a new blog site at www.insiderealestatenews.com This is a site that is edited by John Rebchook formerly of the Rocky Mountain News and has contributions from such notable as Oliver Frascona. This site is sponsored by Universal Lending Corp.

$8,000 Tax Credit Update and invitation

Mark Afman — Thu, 29 Oct 2009 20:48:00 +0000

We have just received word that the Senate has voted to approve a bill this week that would extend the $8,000 tax credit through June of 2010. The “Dodd-Lieberman-Isakson” amendment would also extend the credit to NON FIRST TIME buyers as well. The non first timers will get $6,500 but still that is nothing to sneeze at. I will send out more information as it becomes available. There is a catch on the dateline. The buyer has to have a signed contract by the end of April 2010 and then they have to close by the end of June 2010.If you are a Realtor then the invitation is for another class on “Master Your Marketing Online” by Jason Christiansen of Internet Media. This is a great class on how you can either start your online marketing or take what you are doing now and make it better.

This is the same class that I promoted a few weeks ago but the demand was so good that Jason has decided to provide this training again.

Jason will cover what it takes to help you master your marketing online:
1) Discover what it takes to have a winning business.
2) Marketing, Marketing, Marketing… learn effective marketing strategies.
3) Improve your online presence with an Internet Strategy.
4) Improve the quality and quantity of your leads.
5) Discover what online buyers are expecting.
6) Energize your business with AUTOMATED internet marketing.
7) Discover what online sellers are expecting.

Reserve your seat by pasting this link into your internet browser: http://imc101.com/register

Or you can send me an email

This training will happen this coming Tuesday November 3rd from 10am to 1pm at the offices of Universal Lending Inc. 6775 E Evans Ave. 80224.

Also please visit a new blog site at www.insiderealestatenews.com This is a site that is edited by John Rebchook formerly of the Rocky Mountain News and has contributions from such notable as Oliver Frascona. This site is sponsored by Universal Lending Corp.

FHA CONDO UPDATE

Mark Afman — Sun, 25 Oct 2009 03:33:45 +0000

You may remember that one of my last updates was about FHA and the new condo project approval process. Well here is a little bit of good news. While we still do not know how this new process will be implemented, we now know that it won’t be implemented until December 7th, 2009. This means that if you are a condo buyer, you have an extra 5 weeks to get under contract and get an FHA case number assigned. If you can get an FHA case number assigned before December 7th you don’t have to worry about having the condo project “re-approved” assuming that the project is currently approved.

Also, It has come to my attention that some Realtors and Buyers are not sure about the process of buying a HUD home. If the buyer is using FHA financing and they over bid on the property, the FHA loan has to be calculated using the HUD offering price, not the actual bid price. So, for example if the HUD property is listed at $100,000 on the bidding web site but you know that you have to overbid by, for example, $10,000 to win the bid, the buyer will have to bring that extra $10,000 to closing because the FHA loan has to be based on the $100,000 listing price. Not the $110,000 bid price. Since FHA and HUD assign a new FHA case number on the original appraisal, you can’t go get a new FHA appraisal. I have had a few situations lately where the buyer wants to use the HUD $100 down program and they think that it is $100 off of the bid price only to find out that it has to be based on the offer price and they had to back out because they did not have the extra cash to make up the difference.

I hope this helps. Let me know if I can help with anything or if you have any questions.

CONDOs Be Afraid, Be Very Afraid

Mark Afman — Sat, 10 Oct 2009 17:58:25 +0000

OK Maybe I am being a little dramatic but the new rules on FHA condo appraisals are going in to affect on November 1 and it may cause you some trouble if you don’t understand how they affect your purchase. If you are trying to buy a condo with an FHA loan, you need to be aware of the rule changes that will affect how condos are approved for FHA Financing. Here is a quick rundown of the specifics:

1) Condo projects approvals will have to be renewed every 2 years.
2) Condos projects that were approved after January 1, 2008 will be OK until December 31, 2010.
3) ALL other condo projects will have to go through the approval process before an FHA loan can be used.
4) Projects will have to have updated insurance for hazard and liability.
5) No more then 25% of the total floor area can be used for commercial purposes.
6) No more the 10% can be owned by one investor.
7) At least 50% of the units need to be owner occupied.
8)There will be no more “spot approvals”. Either all of the units get approved or none of them do.

When this rule was introduced in July, HUD/FHA was trying to make lenders pay for the approvals as well as be responsible for getting them done. Lenders have pushed back saying that they will not do that. So the rules are in place but no one knows who or how they will get done after November 1st.

If you are currently thinking of buying a condo, make sure that the project has been approved since Jan 1, 2008. (To see if a particular condo project is approved contact your lender to have them check FHA Connection, or contact me and I will be happy to help.) If not then until it is determined how these out-of-date projects can be re-approved, you may want to look in a different direction.

I will send more info as it becomes available.

Also please visit a new blog site at www.insiderealestatenews.com This is a site that is edited by John Rebchook formerly of the Rocky Mountain News and has contributions from such notable as Oliver Frascona. This site is sponsored by Universal Lending Corp.

Is FHA financially sound? Also a Lon Welch Invite

Mark Afman — Wed, 02 Sep 2009 00:17:41 +0000

Now for a few FHA updates. There has been some talk that FHA is suffering financially and that because of the huge increase in the popularity of FHA loans, FHA insurance may be over extended. In fact a recent Wall Street Journal article questioned FHA’s performance. The statistics however show otherwise. Through Universal Lending’s connection with an FHA advocacy group in Washington DC, we have learned that things doing just fine. Here are a few highlights:

1) FHA’s capital ratio is projected to remain above the Congressionally mandated 2% level.

2) FHA’s FY 2010 book of business is expected to “earn a profit” of $1.7 billion.

3) FHA recently announced that it will not be necessary to raise mortgage insurance premiums for FY 2010.

4) FHA’s most serious underwriting deficiencies have been addressed including the elimination of the seller funded down payment program. This change reduces FHA’s costs by $2.5 billion in FY2010.

5) FHA loans are performing better on a relative basis than prime loans. According to the latest federal regulator report on bank portfolio performance, the percentage of prime loans that are seriously delinquent has increased 161% while the FHA rate has increased only 30%.

6) FHA’s borrower credit profile has improved dramatically, with average borrower FICO scores increasing from 626 to 692 in the last year.

Probably even more important, the percentage of FHA homebuyers with higher risk characteristics (FICO scores below 620) has declined dramatically in the last two years (from 45% in June 2007 to 7% in June 2009). Dispelling the myth that FHA is being flooded with subprime loans, the agency insured 43% fewer purchase loans with FICO scores below 620 in June 2009 than were insured in June 2007 even though FHA?s purchase activity increased 345%.

So how has FHA managed to remain financially sound when other larger institutions have experienced massive losses? FHA lenders have a dog in this hunt. They have strong financial incentives to stick with smart underwriting standards. They also have not wavered from the “plain jane” 30 year fixed loans. FHA loans are also priced right and lenders will work hard to make sure that the FHA loans perform well.

FHA is also cracking down on lenders that do not follow the rules. The recent action with Taylor, Bean, & Whitaker is a reflection of that. FHA lenders are recertified every year and the lender must report any irregularities or changes in their net worth. Lenders like TBW also have a reputation risk if there are any public disclosure of any violation of FHA rules. So Lenders have a huge incentive to keep loans that are at a low risk of default.

This is true at the origination level as well. Lending guidelines are much tighter which means that some loans that could be done a year ago may not be able to be done today. You can look for even tighter guidelines in the future.

So the good news is that FHA is still in great shape and is a still a great loan for most buyers that do not have a big down payment. The bad news is that you really need to get your buyers prequalified with a good FHA lender before you spend any time at all showing them properties because fewer of them will qualify then before.

Let’s talk about the Lon Welch event invite. Lon called me the other day and wanted me to help get the word out about a new workshop he is presenting in Denver. The workshop is called: “The Thrive Workshop”.

Lon says “This idea packed workshop is a interactive discussion of the success concepts for Realtors from the 2009 Edition of “Thrive: How Realtors Can Succeed In A Down Market”. Over 12,000 agents in Colorado were surveyed to identify agents who were succeeding in a market down cycle and determine what they were doing that helped them to continue to succeed despite the changes in the market. In addition, almost 100 other agents nationwide were interviewed in other down markets and the results were analyzed and the success factors and best practices were identified. Attendees will be able to review the habits and behavior of these successful agents, take the survey, and compare their results to these successful agents. This is an very insightful experience and will help the attendee to identify areas where they can improve their performance and generate more income. No fluff, just good material that you can use right away to improve your business.”

This event will be held on Wednesday September 9th from 1 to 3pm at the Kaplan Real Estate School at Colorado Blvd and I-25. There is room for 90 people so RSVP to me and I will get you registered for the class. Biff Birkmeyer of Direct Title is co-sponsoring the event.