Seth Jacobs – Maine Mortgage Banker / Broker

It’s Official: FHA Hike of 75bps Will Come April 1.

The Federal Housing Administration is following through with its pledge to increase upfront and annual insurance premiums on its forward single-family business. The plan is to help rebuild it’s insurance emergency fund which has taken a hit over the last few years during the housing collapse (FHA has paid out nearly $37 billion in defaulted mortgages since 2008).

Unveiled late Monday, the increases are designed to strengthen FHA’s capital position and “have minimal impact on the market and borrowers,” according to FHA acting commissioner Carol Galante. She noted that FHA streamline refinances are exempt from these premium hikes.

Starting April 1, FHA will hike its upfront premium by 75 basis points to 175 bp on all single-family loans, including jumbos.

FHA is also hiking the annual premium on loan balances of up to $625,500 on April 1. On higher balance loans or jumbos, FHA is planning to implement a 35-bp hike in the annual premium on June 1.

The federal mortgage insurance agency currently charges a 115 bp annual premium when the loan-to-value ratio is above 95%.

Hillary Bickford

207-831-1900

hillarybickford@gmail.com

Beautiful country cape in a quiet yet convenient location.Wonderfully landscaped, including a functioning barn w/ pastures.Very well maintained w/ hardwood and pine floors, open concept, 1st floor bedroom/den option, w/ daylight basement and finished room.

As the year draws to a close, it’s time to squeeze in some tax deductions and credits that might save you money. If you are looking to reduce your tax liability, here are some 2011 year end tax planning tips or options you may want to consider READ MORE

Mortgage bond prices closed slightly below the levels where daily pricing was set applying upward pressure to mortgage rates. Trade was volatile all day tied to the movement in stocks. Equity and bond prices were yo-yoing with each snippet of news out of Europe.  Tomorrow brings weekly jobless claims and Q3 advanced GDP before lenders set pricing. Prepare yourself and your borrowers for a wild ride. Regardless of what happens in Europe stocks and bonds will most likely be EXTREMELY volatile.

This morning, FHFA announced their enhancements to the HARP refinancing program. Operational details of the plan are to be released on November 15. Only loans that were purchased or guaranteed by Fannie Mae or Freddie Mac on or before May 31, 2009 and have a current LTV over 80% are eligible. In addition, the loan must be current, no late payments in the last six months and no more than one late in the last 12 months. There are no restrictions on who may refinance these loans.

Program guidelines include:

-              No limit on LTV, if new loan is a fixed rate loan (current LTV must be above 80%)

-              Loans previously refinanced under HARP not allowed

-              Certain agency fees will be waived if new loan is a shorter term loan

-              Appraisals not required where Agency AVM is available

-              Certain originator Reps and Warrants will be  waived

Borrowers can determine if their loan is owned or guaranteed by Fannie or Freddie at http://www.fanniemae.com/loanlookup/ or http://www.freddiemac.com/corporate/

Investors sold Bonds today and took some profits after the big surge in prices this week. Markets don’t go straight up or straight down so the move lower today wasn’t a big surprise and came without any gloom and doom headlines.

The 3.5% coupon fell 88bp to end at 102.78. Stock markets fluctuated between positive and negative several times during the session and ended with moderate gains but the Dow had its worst week since October 2008 down 6.4%…closing at 10,771.48 up 37.65. The S&P 500 fell 6.5% this week but managed to gain 6.87 to 1,136.43 while the Nasdaq was up 27.56 to 2,483.23 but down 5.3% for the week. The big news today was the record one day move for Gold as it had lost $100 to $1,641/oz before finishing at $1,653/oz down $88. Oil settled at $79.85/barrel down 66 cents falling 9.2% for the week. Next week economic data is plentiful and will give investors a broad look at the economy.

How do you stimulate the economy without spending any money? You do the twist and shuffle. The Federal Reserve announced Wednesday that it would engage in a new policy known as “Operation Twist,” consisting of selling shorter-term Treasuries and using the proceeds to buy longer-term government bonds. The Mortgage Bond markets soared today after the surprise announcement from the Fed saying that it will be purchasing agency Mortgage Backed Securities from the principal payments from its holdings of agency debt and agency Mortgage Backed Securities in agency Mortgage Backed Securities. The move took players by surprise in a big way. The 3.5% coupon jumped 134bp to end at an all-time high of 103.00 The next few trading days will determine if we switch over to the 3% coupon, which finished at 99.81 up 134bp today.Stocks plunged after the Fed statement read that there are significant downside risks to the economy. The Dow lost 283.82, the Nasdaq fell 52.05 to 2,538.19 while the S&P 500 Index dropped 35.33. Oil in after hours trading was last seen at $84.83/barrel down $2.09. Weekly claims will be released tomorrow.

Outgoing Federal Deposit Insurance Corp. Chairman Sheila Bair on Friday said it may be time to think about implementing a slow increase in interest rates to make bank lending more profitable. Bair’s comments come as some bankers have been criticizing the Federal Reserve’s zero interest rate policy, insisting that it is hurting bank profitability and is that it is impeding the lending environment. The Fed on Wednesday held interest rates at record-low levels as its controversial $600 billion bond-buying program came to an end. The central bank said it planned on keeping rates low for an “extended” period of time.

“That is an interesting debate, and I hear that from a lot of bankers that a gradual increase in interest rates could make lending more profitable and therefore provide more incentives for lending,” Bair said to reporters at the National Press Club after her last official speech as chairman of the agency. “It is an argument that the Federal Reserve board is very aware of and there is the counter argument in terms of economic impact [of raising interest rates]. Maybe it’s time to think about it a little more.”

With Mortgage Interest Rates at an all time low of 2011, the window to refinance may soon be closing.

Before deciding on what terms lenders will offer you on a loan (which they base on the “risk” to them), they want to know two things about you: your ability to pay back the loan, and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they’re named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk).

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. In fact, the fact they don’t consider demographic factors is why they were invented in the first place. “Profiling” was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody’s willingness to repay a loan.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten year old accounts are good, six month old ones aren’t as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit — credit scores requested.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

To get a FREE Copy of your credit score, contact your Maine Mortgage Banker today.