With the passage of HB 562 and HB 359 earlier this year, the Treasurer and Prosecutor are now authorized to use DTAC funds for foreclosure prevention programs, nuisance abatement, and demolition.

The Homeowner Helpline program will include a public awareness campaign, as well as funding for housing counselors, nuisance abatement, rescue funding, mortgage fraud prosecutions, and homebuyer assistance. Homeowner Helpline will also fund a mediation program with the Municipal and Common Pleas Courts. The purpose of mediation is to encourage homeowners and lenders to come to the table and work out options for payment in order to prevent the homeowner from losing their home to foreclosure.

So sound off here, folks! What do you think of the state or county getting into the business of counseling, rehabing homes, or demolition? Is this a common sense proposal?

Short-term, that means mortgage rates are heading lower – MUCH lower. The loans on your home and mine are now backed by the full faith and credit of the United States Treasury now. What seems like zero risk means that more investors will buy mortgage bonds and rates will continue to decline.

An interesting facet of this bailout, though, is that the “solution” is having the opposite effect as the intended purpose of the grand vision for Fannie and Freddie to improve the lives of average Americans. Peter Schiff doesn’t pull any punches in a recent column:

The original idea that gave birth to Freddie and Fannie, which is to make housing more affordable to average Americans, should now be seen as farcical. Their new goal is to keep housing prices high. Absent Freddie and Fannie, housing prices would fall sharply and the mortgage market would stabilize. Americans would once again be able to buy affordable houses with mortgages they could actually repay –just like their grandparents did. Instead they will keep overpaying for houses, burdening themselves with excessive payments in the process, and ultimately sticking taxpayers with the bill when they default.

What’s your opinion?

Regardless of our second guessing of massive policy decisions, this is an excellent time to refinance your home. Call us if your mortgage rate on your first or second loan is more than 6.5%! We’ll give you the straight scoop every time.

1. The program continues baseline FHA requirements, including the stipulation that mortgage payments must be timely BEFORE the borrower’s teaser rate expired and loans reset. They also want to see good credit otherwise – credit cards, auto loans, etc. Easy enough, right? Here’s the rub: Americans have been taught for years that the LAST thing to pay late is the mortgage. If you fall on hard times, push a credit card payment but NEVER be late on your mortgage. So many of the people who would be helped by this program have already made late payments due to hard economic times before ever running late on a mortgage payment. So they, in fact, get turned down on this program.
2. The interest rate environment is not generally increasing ARM payments on reset. That’s a little known secret the mortgage industry has been less-than-forthcoming about - reset interest rates are roughly equal or lower so your payment might actually become less than while in the “fixed” period of their ARM. So this program is creating an unnecessary incentive for the middle class to “let go” in the struggle to rising living expenses. Faced with the stigma of late mortgage payments, most would probably continue the juggling act as they wait for better economic times.
3. The equity requirements of FHA are not going away - in fact, as of Oct 1, they increase to 3.5% - whether purchase down payment or refinance equity. That’s a huge problem for people living on the edge, financially. Think about it. If Joe Six-pack is having trouble making his house payment, chances are he has other debt and little home equity. So many of our customers who need FHASecure, don’t qualify because they don’t have enough equity.

For these reasons, I can’t understand why the program is offered. It’s either poorly conceived or a political gimmick – I suspect some of each.  In fact, our firm has not been able to close one of these loans.  They have all been rejected for one reason or another.  And we’ve been able to help some of the people through other means.

For my readers who are not familiar with FHASecure, the program was announced by President Bush in early 2008 to help ease the mortgage crisis. Like all FHA loans:

• underwriting takes into account the borrowers’ ability to repay,
• fixed rates are overtly promoted,
• escrow of taxes and insurance are required,
• real human appraisals are required,
• full-documentation is critical,
• mortgage insurance is included, and
• there is gads of foreclosure prevention assistance.

FHASecure is available for loans that reset between June 2005 and December 2009.  So there is still time for this program to kick in and help families in Ohio.  I hope it helps.

Struggling to pay your mortgage? Have an adjustable rate mortgage or a balloon? Not sure what your mortgage means? Realizing that your lender didn’t escrow and now you have a big property tax bill? Worried about foreclosure?

The Franklin County Save our Homes Taskforce in cooperation with the county treasurer is holding a Borrower Outreach Day on Saturday, September 13, from 10-1. This event will be at Memorial Hall, Board of Elections (Downtown) at 280 East Broad Street in Columbus.

If you are worried about making your next monthly loan payment for any reason, you will have the opportunity to:

• Meet with servicers/lenders privately
• Learn about refinancing
• Learn about foreclosure prevention, legal rights, loss mitigation, and credit counseling.

For more information, please contact:
The Franklin County Treasurer’s Office at 614-462-7503

This event may help you if you are concerned about your mortgage status.  If you need help understanding your home mortgage in Ohio, call us today at 888-818-1850. We are committed to building the wealth of our clients. We want you to succeed in homeownership!

The number one incoming search term for this website is 100LTV and 100% loans. People are really looking hard to buy a home with no down payment. No problem, right? There’s 100%, 80/20 split loans, FHA, and the list goes on.

Unfortunately, that’s wrong! Most of these loan products have dried up in the last 12 months – FHA with down payment assistance (DPA) being the only survivor.

Here’s how it works. Sally Buyer wants a home but has no savings. So she writes a contract on a home that includes a line about qualifying for an FHA mortgage. In that negotiation, Sally offers to pay 3% more than list price for the home if John Q. Seller will “donate” 3% of the purchase price of the home plus $400 to a certain “charity.” John Q. Seller agrees because Sally Buyer seems solid and this is a full-price contract – a sale! Sally Buyer also signs an agreement with the “charity” to accept a 3% “gift,” contingent on the sale closing and the seller donating.

These non-profit organizations have been under fire for years because DPA is a loophole that allows home purchases with “no skin in the game” while inflating home prices. But legal challenges from the assistance providers themselves have kept the life support on.

Under the Housing and Economic Recovery Act (HR 3221) recently passed into law, DPA programs will no longer be available as of October 2008. That’s right: no more AmeriDream, Nehemiah or other “charity” gifts to get you an FHA mortgage with no money down!

Using down payment assistance is entirely normal, and many of our clients have used it to good advantage. But it should be remembered that what can help a single family may be a recipe for disaster when it becomes common practice across the country. Mortgages with down payment assistance go into default and foreclosure at nearly three times the rate of those borrowers with some money out of pocket, according to FHA.

And while some groups are trying to save DPA, the solvency of the banking system and FHA is at risk now, so it’s understandable that they would try to stop the bleeding. Especially when you consider that we - the taxpayers - are ultimately holding the bag when it comes to bailing out banks or funding HUD and FHA through our tax dollars.

Nevertheless, this is going to be a blow to our mortgage company, as well as a blow to the entire market here in Ohio.  Maybe it’s smart given the rise of foreclosures.  But 0-down loans are 64% of our FHA purchases, or 13% of total business. So yeah, it hurts when 13% of your company revenue goes whoosh!

If you are looking to buy a home, now is your chance to find a no-money-down loan! You don’t have to be a first-time buyer.  Call before it’s too late!