Downpayment Assistance = Economic Impact

Downpayment assistance (DPA) programs in the U.S. had a major beneficial impact on the economy last year, creating $38.6 billion in revenues, 235,000 jobs, and $4.6 billion in total tax revenues, according to an economic-impact study done by two well-respected California economists, Dr. Robert Waste and Dr. Robert Fountain.

Some highlights of their research:

More than 200,000 new and existing homes were sold last year with DPA. (The research covered the 12 months from December 2007 through November 2008.) Roughly 40% of all loans originated by the Federal Housing Administration used DPA. Nehemiah's DPA program helped families purchase more than 78,000 new and existing homes last year. More than 25% of those sales were on foreclosed homes, effectively taking them off the market. About 40% of the borrowers were households headed by minorities and more than one-third were headed by females. Of 235,000 new jobs created last year, 195,000 came from new-home construction and the rest from new-home sales. DPA also accounted for $4.6 billion in total tax revenues last year.

Opportunity of a Lifetime for First Time Home Buyers

I believe this is such a great opportunity that I decided to re-post the information in hopes that every first time home buyer is aware of this program.

For aspiring home owners who find their goal stubbornly elusive, newly enacted legislation providing a tax credit of as much as $7,500 for first-time home buyers might just be the opportunity of a lifetime. But like so many of the good things in life, time is of the essence for buyers who want to take advantage of this outstanding opportunity. Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible. For more information Click Here.

President Obama & HR 600

Below is a copy of an open letter sent to President Obama seeking his support of H.R. 600, the FHA Downpayment Reform Act, recently introduced by Congressman Al Green (D-TX) with bi-partisan support of Representatives Maxine Waters (D-CA) and Gary Miller (R-CA).

For more information about H.R. 600, please go to: http://www.hr600.org/.

January 26, 2009

President Barack Obama

The White House1600 Pennsylvania Avenue, NW

Washington, D.C. 20006

Dear Mr. President,

Congratulations on your historic inauguration. Your swearing-in was a defining moment in American history – a moment when our nation lived up to its creed that all men are created equal. We wish you and Congress well in these challenging times.

You are aware of the troubles we face in our economy, particularly our housing market. New homebuyers have vanished. Housing starts are at their lowest level in a half century. More than 2.3 million homes stand vacant in our communities. The loss of homebuyers is weighing down the broader economy, hurting home good stores, mom and pop shops, builders, construction companies, and local governments, all of whom depend on a stable housing economy for revenue. Economists across the political spectrum agree: "the housing market lies at the root of our economic challenges".

So what can we do? To stabilize the housing market, we are proposing common sense solutions that will educate homebuyers and will give credit-ready homebuyers an opportunity for affordable homeownership and incentivize them to enter the market. We hope you will join us.
You stated in December that, “we need to move past the stale arguments that say low-income Americans shouldn’t even try to own a home.”

We agree, Mr. President. And we are ready to help. At a time when most are proposing solutions that cost the taxpayer money, we are supporting no cost bipartisan legislation in Congress (H.R. 600) to reauthorize and reform downpayment assistance programs funded in part by sellers, also known as DPA, which expired under federal law last year. DPA funding from qualified non-profits helped more than one million creditworthy families and individuals become homeowners from 1998 to 2008, and generated $24 billion in economic activity in just a five year period alone, according to a 2007 study by George Mason University’s Center for Regional Analysis. Further, according to a soon to be released study by Dr. Robert Fountain at California State University, DPA was responsible for creating 235,000 jobs over the past decade and during the twelve months preceding the elimination of DPA helped generate $4.6 billion in local and state tax revenue. These are dollars that state and local economies throughout America have come to rely upon. If this program remains closed, however, more than 300,000 aspiring homeowners – each of whom is deemed creditworthy by the Federal Housing Administration - will be shut out of the home buying process annually and billions of dollars and thousands of jobs will remain out of reach for our local communities. Our economy simply cannot afford this. We respectfully urge you to support H.R. 600, The FHA Downpayment Reform Act.

You stated in your inauguration that we must “end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics.” We agree, Mr. President, and we are ready to help. We hope to join hands with your Administration and Congress to find bipartisan support for the policies that will shape our housing market in the future. The past is the past, some people will remain critics of the DPA program and not move past stale arguments that no longer apply; what matters now is our shared pursuit of a more stable economy based on long-term, sustainable homeownership.

You stated in your campaign that we must not repeat “the cycle of bubble and bust” that has plagued our economy. We agree, Mr. President. And we are ready to help. To accomplish such sustainable and responsible homeownership, AmeriDream has educated more than 60,000 potential homebuyers over the last decade and will redouble its education efforts in the coming decade. Studies show that homebuyer education programs lead to more successful homeownership. Further, we believe in FHA’s goal to provide safe, sanitary and affordable housing for low and moderate income families. We believe that if more homebuyers of yesterday chose a FHA insured loan, our country would be better off today. We support a suggestion that you made in 2007 to develop a Home Score system, a system to create a simplified, standardized metric for home mortgage allowing prospective homebuyers to easily compare various mortgage opportunities so that an educated and informed homebuyer can make an educated and informed decision. The more successful our homeowners are, the less likely our economy is to be felled by another housing bubble.

Mr. President, we respectfully ask for your support. We encourage you to back H.R. 600, The FHA Downpayment Reform Act, so that creditworthy working class homebuyers may once again stimulate the housing market. The reauthorization of DPA is supported by the Congressional Black Caucus, the Congressional Hispanic Caucus, the National Association of Realtors, The National Association of Mortgage Brokers, the US Conference of Mayors, the National Association of Home Builders, an affiliate of the AFL-CIO - the Labor Council for Latin American Advancement, the National Association of Counties, many other state and local organizations and hundreds of thousands of other Americans who have voiced their support to their elected officials. We urge you to make homebuyer education a central part of you economic recovery strategy. Finally, we welcome your commitment to make petty grievances in our government a part of our past. Simply put, our country can afford no less.

We look forward to working with your administration as we pick ourselves up, dust ourselves off and get back to making responsible and sustainable homeownership for all a priority. Best wishes to you, your family, and your Administration in these historic times.

Sincerely,

Ann Ashburn, President

BACKGROUND: AmeriDream, a 501(c)(3) charity, was established in 1999 to provide housing-related programs to low and moderate income individuals and families. Our mission is to permit qualified aspiring homeowners, a disproportionate number of whom are first-time homebuyers, minorities, legal immigrants, women headed households, and single-parents, achieve and sustain homeownership. Most significantly, AmeriDream has provided critical down payment assistance to over 250,000 low and moderate income homebuyers, enabling them to purchase their homes without using any taxpayer dollars. In addition, AmeriDream has educated over 60,000 homebuyers through our homebuyer education course; counseled and assisted approximately 1,200 people to retain their home when confronted with mortgage difficulties; and built 168 affordable housing units in our inner cities, most notably in Southeast Washington, DC. To date, AmeriDream has committed over $30 million to projects unrelated to its down payment assistance program.

Doing things right for America's homebuyers.

AmeriDream, Inc. 200 Professional Drive 4th FloorGaithersburg, MD 20879 Phone: (301) 977-9133Toll Free: (866) 263-7437 (866) AMERIDREAM http://www.ameridream.org/

FHA Refinance Loans Save Borrowers Thousands of Dollars As Interest Rates Hit Record Levels

The average FHA mortgage rate for a thirty-year home loan dropped below 5% this week. Mortgage Brokers Network executive, Steve Park said, “This is a rare opportunity to revive the mortgage industry because interest rates have dropped to record levels that have not been available for the last forty years.” Homeowners across the country realize this rare financing opportunity, so thousands of borrowers are rushing to lock into this monumental era that could spur a much needed home refinancing boom.

Today, the biggest obstacle for most borrowers is credit. In many cases, conventional lenders have credit score requirements seeking credit scores over 680. In this dried up credit markets, even professionals like doctors or lawyers have found it difficult to qualify for a traditional mortgage. If you’re interested in a refinancing mortgage, it is imperative that you have good or excellent credit and the ability to be able to provide documentation for income that lending underwriters deem sufficient.

FHA still offer a refinancing opportunity for borrowers with good or bad credit can qualify for a FHA home loan that is fixed for thirty years. The most popular FHA loan allowing refinancing is the FHA mortgage that requires borrowers to be at 97% loan to value for the standard FHA rate and term refinancing and 95% cash out refinancing would require home owners to have at least 5% left in your home equity. However in some cases the FHA lender will require two appraisals for cash out refinancing above 85% loan to value.

If you have no equity available because of the declining home value, consider the Hope for Homeowners program insured by FHA. This unique program enables homeowners who have mortgage balances greater than the appraised amount. If you are unable to qualify for Hope for Homeowners, consider a loan modification, because credit scores and late payments will not prevent you from renegotiating your mortgage rate. www.contactify.com/b4364

FHA and Obama

President Barack Obama has made clear that he understands how paramount the FHA mortgage loan system is for revitalizing the housing markets from a local and national level. Low interest rates and comprehensive FHA loan programs are essential for America to rebuild its credibility with homeowners and new homebuyers. Most mortgage insiders believe that Obama understands the importance of recapturing property values that will help many families get back on their feet. The Obama Administration will likely move quickly to reestablish credibility for American home financing. FHA mortgage rates remain at the lowest levels ever. Today a qualified borrower could take out a FHA mortgage with a fixed interest rate for thirty years at 4.75%.

Many believe that the President should review a few of the FHA home loan products and provisions to see which loan programs are succeeding and which products are missing the mark. Hope for Homeowners was a program passed over the summer as part of the FHA mortgage reform package. In a recent report, FHA loan pros said that as of “October 1st and HUD has allegedly allotted 22 people to the program.” They would not confirm it, but clearly their reports and articles were blowing much needed whistles on the government loan relief programs that were supposed to be saving homes and giving new opportunities to homeowner that were able to qualify for home refinancing.

According to congressional testimony by James A. Heist, HUD’s assistant attorney inspector general for audit, “it is our understanding from the Department that funding for 22 staff positions and approximately $20 million for system improvements have been made available for the Hope for Homeowners program.” Mr Heist does not say HUD has actually deployed 22 people to work on the H4H program, he only says “it is our understanding” that money has been made available for this purpose. This is hardly re-assuring and, in fact, there is no evidence that anyone at HUD is actually doing anything. How do we know? Well HUD’s figures as of December 31st — three full months after the H4H program began — show there have been 370 program applications but that “no Hope for Homeowners cases have been insured to date.” Look for Congress to investigate the Hope for Homeowners program and while they’re at it expect them to review the FHA Secure loans as well. www.contactify.com/b4364

Down Payment Assistance Virtual Town Hall Meeting

DPA Supporters, On Friday, Nehemiah sent an email to fellow DPA Supporters announcing the launch of DPAGoundswell2 which coincided with the introduction of H.R. 600, FHA Seller-Financed Downpayment Reform Act of 2009, by Representative Al Green (D-TX). H.R. 600 is the 2009 version of last year's bill (H.R. 6694) that would restore seller-funded downpayment assistance (DPA). We would like to invite you to attend our first Virtual Town Hall of 2009. Friday, January 23, 200912 Noon EST. To join our Virtual Town Hall. Dial in #: 877-269-7289 Passcode: 13908. During the Virtual Town Hall, our CEO, Scott Syphax will discuss several topics relating to the fight to restore DPA. The agenda includes a breakdown of the new bill (H.R. 600), a discussion of our current effort to have H.R. 600 included in the new stimulus bill, what you can do to support the DPAGoundswell2 campaign and answers to your live questions. Recent developments in Washington, D.C. have provided us with a new opportunity. If we receive the same level of support in this campaign that we did during the original DPA Groundswell, we are confident that a well informed Congress will restore DPA. Space is limited; if you receive a busy signal the meeting has reached capacity. http://www.nehemiahcorp.org/

Am I a Good Candidate for Refinancing?

With interest rates at an all time low, many are wondering if this would be a good time for them to refinance. There are a few basic qualifying questions that you should be able to answer first.

1.) What exactly do I owe on my home? This includes any 2nd mortgages or home equity lines of credit.

2.) What is/are my current interest rate(s).

3.) Do I have any pre payment penalties and what are they? This can be found with your loan documents (typically it is written in your “Promissory NOTE” and details are in the addendum to the note).

4.) What is my current value? This is a little difficult to pinpoint without an appraisal (which will be ordered to determine current value) however, there are several websites such as www.zillow.com that will give you a basic idea.

5.) How long do I plan on staying in the home?

If you owe more that the current value, you will most likely not be a good candidate for refinancing; however you may be able to refinance your first into an FHA loan (where the TLTV “Total Loan to Value” exceeds 100%). Once again, if the first mortgage is higher than current market value this will not be possible without having to bring cash to the table to close.

Many people in ARM’s (Adjustable Rate Mortgages) that are enjoying the current low rates due to being tied to a low index need to remember that in a market when these indexes begin to increase, the 30 year fixed rates will also increase. You don’t want to get caught in a market where you are forced to refinance to less favorable fixed rate loans. Time is of the essence and rates will most likely not get any better than they currently are.


When is it worth refinancing?

The answer to this question will be different for each scenario. It really depends on several factors; how long you plan on staying in the home, what is your primary incentive (lower payment, shorten term of the loan, avoid a fluctuating rate when the current fixed period ARM begins to adjust etc.), and if it is an option for you. Remember that lending guidelines have become stricter than ever and the loan that your originally qualified for may have been in a time when the guidelines where much looser. If you purchased or refinanced your current loan at the height of the market when values where high, you may upside down with no equity and this may prevent you from refinancing.

What are the qualifying requirements?

1.) Minimum credit score of 620 for Conventional and 580 for FHA is the standard. Lenders pull a tri merged credit report from Equifax, TransUnion, and Experian. The highest and lowest scores are dropped and your middle credit score becomes your qualifying credit score. If there are two borrowers such as a husband and a wife then the lower of those two mid scores becomes the qualifying credit score. Payment history must be excellent over the last 24 months with only minor isolated slow payments. Medical and/or minor collections and/or charge offs may not prevent you from qualifying but usually have quite an impact on your credit score. Note: Scores provided for consumer credit reports are not always the same as the lender receives with a tri merged report for the purposes of a mortgage.

2.) Must be able to verify your income with 30 days worth of pay stubs, recent years W-2, and/or 2 years complete tax returns (if self-employed, 1099 contractor or if 25% or more of your income is commission). Over-time, Part-time, and seasonal income may be used if lender can verify that you have received it for 2 years and that it is likely to continue.

3.) Upon determining the appraised value of the property; the new loan can not exceed 97% FHA/ 90% Conv of the appraised value. The amount needed for financing includes the payoff of the existing loan(s), closing costs and pre paid items (tax and insurance escrows).

Below is a list of situations that may prevent you from qualifying for a refinance.

1.) Credit - If you have had more than one or two 30 day late payments on your mortgage in the last 24 months or are currently past due or have a pattern of slow payments on other credit. Also, high balance collections and charge offs may prevent you from refinancing without evidence that they have been settled. Any open judgments or liens that may affect title must be paid. A prior Bankruptcy will require at least 2 yrs (FHA) / 4 yrs (Conv) from discharge date with reestablished credit. There is not much tolerance for derogatory credit after a bankruptcy. A detailed explanation may be required along with a complete copy of the bankruptcy papers.

2.) Income - If you are self employed (less than 2 years) or originally qualified for a “stated income” loan in which your tax returns do not evidence the income that you state you make. Adjusted Net Income (after expenses are deducted) from your most recent 2 years tax returns will be averaged to establish income. If you are self employed in an industry that is suffering and your tax returns indicated a decline in income this may send up a red flag and only recent year income may be averaged to establish income.

3.) Collateral - You owe more that current value.


What do I do if I don’t qualify for a refinance and I can no longer afford the monthly payment?

You can contact your current lender(s) and discuss the possibility of a loan modification. This is where the lender may either reduce your rate or forgive a portion of the amount owed and re amortize your payment to a more manageable one. Keep in mind that they do not want to help you out of the goodness of their heart. There must be evidence that a hardship exists and their incentive is to prevent the possibility of a foreclosure. Most lenders will not even discuss these options unless you are currently delinquent on your mortgage. They will send you a loan modification package requesting income and asset documentation to determine if you qualify. If they do not think that the loan modification will prevent foreclosure, they most likely will not grant it.

If you are not sure where to start and you would like counseling, you can call the toll-free hot line of the Hope Now alliance - an industry group trying to coordinate a response to the mortgage crisis - at 1-888-995-HOPE.

To get pre-qualified Click Here.

Keeping the "Dream" Alive

Now more than ever Realtors need a little something extra to help their clients gain confidence and move forward with purchasing their new home. Ameridream has just the thing, it's called the "Dreamkeeper" program and its something every agent should know about. Ameridream's Dreamkeeper program guarantees their mortgage payments for up to 4 months and as much as $2,000 per month should your clients lose their job or be unable to make their mortgage payments for reason that fall within the guidelines. Ameridream is selling Peace of Mind in trying times. http://www.ameridream.org/Programs/DreamKeeper/

Still No Word on DPA out of Washington

After a brief conversation with Congressman Al Greens Washington office today, there is still no word on a vote to reinstate the Down Payment Assistance programs as hoped. Congressman Greens office reports that the bill did not reach the floor today, possibly tomorrow or "sometime in the near future" according to office staff. Stay tuned......

Down Payment Assistance Back?

A new bill to reinstate reformed downpayment assistance will be introduced as early as tomorrow. The bill is expected to be introduced by Congressman Al Green (TX) with bipartisan support. The bill will have the same language as unanimously passed last year by the House Financial Services Committee.

Opportunity of a Lifetime for First-Time Buyers

For aspiring home owners who find their goal stubbornly elusive, newly enacted legislation providing a tax credit of as much as $7,500 for first-time home buyers might just be the opportunity of a lifetime.But like so many of the good things in life, time is of the essence for buyers who want to take advantage of this outstanding opportunity. Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible. For more information click the link: www.contactify.com/b4364

4 Tips when Shopping for a Home Mortgage Loan

* Choose the type of financing that best suits your needs: Although ARM's have been popular in the past, most people in today's economy will choose a 30 Fixed Rate Loan due to the low rates currently available with "No" future risk of fluctuating rates. Most conventional and government loans do not have prepayment penalties if the loan is paid off early due to sale or refinance.

* Know your buying power: You need to have a good idea of where you are at financially, and that includes knowing about your finances and understanding your FICO score and where you stand. Your current income and debts will determine the amount of the monthly payment you can qualify for.

* Figure out a price strategy. Know how much money you have to invest for your down payment and closing costs. Most conventional loans require 10% of the purchase price down, FHA requires 3.5%. Closing costs and prepaids (taxes, insurance, interest) will also be due at closing and will cost approximately 3% to 4% of the sales price. These items can be paid by the seller if negotiated in your original offer. Down payments can be in the form of, checking or savings accounts, gifted, or borrowed against secured investments (credit card advances are not acceptable). All sources for down payments and closing cost must be verifiable.

* Choose Wisely. It is extremely important to choose a qualified experienced mortgage professional to help you determine what price range best suits your current and future financial goals. Ask questions and seek to find your comfort zone with your mortgage partner. Click the link below to apply now and you will be contacted by a mortgage professional within 24 hours. Contact me? Simply Click Here.

What this means to you!

By staying on top of financial trends and planning accordingly, you can time your rate lock to compare and get the best mortgage rate possible. In other words, when the tide is low, put a call into your lender and lock in that rate. You'll enjoy waves of prosperity if you do.

Who are these mortgage interest rate folk anyway?

Today's secondary market investors include government-chartered companies like Fannie Mae and Freddie Mac, plus insurance companies, pension funds, and securities dealers. Although Fannie Mae and Freddie Mac are different organizations, they participate in similar activities. Both can buy mortgages, and both can group mortgages together for resale in what's called mortgage-backed securities. These are highly liquid investments, meaning that they can be readily bought and sold.

Investor Demand

Here's how the secondary market affects you as a would-be homebuyer. Investors want to earn the best return possible. That level of return is determined by the current and anticipated condition of the economy. When the economy is on an upswing, future yields are expected to be better than current yields. Investors, therefore, will hold off buying until higher yields materialize. This drives mortgage interest rates up, because lenders cannot sell their loans at lower yields.
Conversely, when the economy is in a downturn, investors buy up what's available to avoid being stuck with lower yields later. This drives mortgage rates down, as investors are clamoring to buy before yields get too low.

The Mortgage Rates Basics

The mortgage lender that funds your loan is called the originator. A loan originator may be a bank, credit union, or other type of financial institution. On the date of funding, the money flows out of the originator's hands and into yours. You then turn that money over to the seller of the home.
Once the loan is funded, the originator has the option of keeping that loan in its portfolio or selling it on the secondary market. If the originator keeps the loan, it makes money by way of the interest you pay each month. If the loan is sold, the originator replenishes its funds and can make more loans to other homebuyers. Basically, the secondary market investors keep funds circulating so that loan originators don't run out of money for new mortgages.