Forbearances

Apache is functioning normally

A typical 20% down payment on a home in a U.S. metropolitan area costs $80,250, based on the median price of a single-family home of $402,600 in the second quarter of 2023.  However, for many first-time homebuyers, the hurdle of making a substantial down payment can seem insurmountable and many can only put down 3-5%, or $12,078 – $20,130.

This is where down payment assistance programs can come into play, offering a lifeline to those aspiring to become homeowners. But, what are they exactly and how can we help our clients utilize them?

What are down payment assistance programs?

Down payment assistance programs (DPAs) are initiatives designed to help first-time homebuyers bridge the gap between their savings and the down payment required to purchase a home. These programs are typically offered by government agencies, nonprofit organizations and occasionally private entities. DPAs can take various forms, such as grants, loans or second mortgages, and they are typically tailored to meet the specific needs of the target demographic.

There are four main types of down payment assistance:

  • Grants: Gifted money that never has to be repaid.
  • Loans: Second mortgages that are paid monthly along with your primary mortgage.
  • Deferred loans: Second mortgages with deferred payments that only have to be paid when you move, sell or refinance.
  • Forgivable loans: Second mortgages that are forgiven over a set number of years (often five, but maybe up to 15 or 20). These only need to be repaid if you move, sell or refinance too early.

Examples of down payment assistance programs

The FHA offers low down payment loans to first-time homebuyers. With an FHA loan, borrowers can put down as little as 3.5% of the home’s purchase price. This low barrier to entry makes homeownership more achievable for those with limited savings.

Many states in the U.S. also offer their own DPA programs to assist local homebuyers. These programs can provide grants, low-interest loans or second mortgages to cover a portion of the down payment and closing costs. The specific details vary from state to state, but they generally aim to make homeownership more accessible.

Some local housing authorities and city governments provide down payment assistance to residents. For instance, the city of Denver has its “metroDPA” assistance program, which is currently helping people throughout the Front Range become homeowners. If you make up to $188,250 a year and have a credit score above 640, metroDPA can help with a home loan and down payment assistance to help you buy a home.

Nonprofit organizations like Habitat for Humanity have been instrumental in promoting homeownership among low-income individuals and families. They offer sweat equity programs and interest-free loans to help prospective homeowners achieve their dreams.

We all know that one of the most significant barriers to homeownership for first-time buyers is the initial down payment. Many people are eager to learn ways they can afford it but feel lost as they try to navigate the landscape of what to do next. 

This is where we as Realtors are ready to educate our buyers with information and help clients find the right path(s) to alleviate financial burdens by providing funds to cover a portion of the down payment. 

Remind clients about demographics for DPAs

First, we educate clients that DPAs often target specific demographics, such as low-income families, veterans or those living in high-cost housing markets. By doing so, these programs broaden the pool of eligible homebuyers and ensure that homeownership is not solely reserved for the well-off. As a result, we should also set expectations for clients so they don’t assume they’ll have DPAs to rely on. 

Explain the different assistance programs available 

Another factor to guide clients on is that DPA programs provide assistance in the form of grants or forgivable loans, though these are harder to lock in. These funds do not need to be repaid if the homeowner stays in the property for a specified period, typically several years. This helps lower the overall cost of homeownership, making monthly mortgage payments more manageable. Be realistic with clients on whether this is a viable option for them and their current financial situation. 

Suggest credit counseling services

Educate clients on where to turn to for credit consulting. For so many, one medical bill or missed payment can take a hammer on credit scores. Clue clients in on places they can turn to in order to help improve their credit scores.

Find a housing counselor

Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures and credit issues. The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD) and they can offer independent advice, often at little or no cost to the client.

Over time, homeowners build equity as they pay down their mortgages and as property values appreciate. DPAs set first-time homebuyers on the path to wealth accumulation, enabling them to build a financial foundation for the future.

The resurgence of down payment assistance programs represents a ray of hope for first-time homebuyers, particularly those facing financial constraints. These programs play a pivotal role in reviving the dream of homeownership by reducing the initial financial barrier and making it more attainable for a diverse range of individuals and families.

By offering assistance in various forms, from government-backed loans to nonprofit grants, DPAs allow first-time homebuyers to step onto the property ladder. This not only benefits the homeowners themselves but also strengthens communities and fosters financial stability.

As the popularity of DPAs continues to grow, they hold the promise of expanding homeownership opportunities for countless individuals, ensuring that the American dream remains within reach for all those who aspire to call a house their home and ultimately build generation wealth.

Jessica Reinhardt is the 2022-2023 chair of the Denver Metro Association of Realtors.

Source: housingwire.com

Apache is functioning normally

The Department of Veterans Affairs (VA) is pausing foreclosures on homes financed with VA loans for six months to help military borrowers in danger of losing their homes, a department spokesperson said in a statement to HousingWire on Monday.

The Veterans Assistance Partial Claim Payment program  — which began July 2021 — allowed military borrowers to skip six or 12 mortgage payments during the COVID-19 pandemic if they had a financial hardship. VA borrowers would resume making the regular payments when they were back on their feet and the missed payments would be moved to the end of the loan term.

The VA, however, ended the program in October 2022 despite the mortgage industry urging the department to delay its expiration, forcing borrowers to pay back payments quickly or refinance at higher interest rates.

The department said it will push all mortgage servicers to pause foreclosures of VA-guaranteed loans through May 31, 2024, according to the statement.

The VA’s decision to reverse course comes on the heels of an investigative NPR article reporting that thousands of VA loan borrowers risk losing their homes after the VA ended the assistance program.

About 6,000 borrowers with VA loans who had COVID-19-related forbearances are in the foreclosure process and 34,000 more are delinquent, according to NPR’s article citing data from ICE Mortgage Technology. 

The COVID-19 Refund Modification program – intended for borrowers who have not been able to financially recover from the pandemic back to their previous income level – was set to expire at the end of 2023, but is now extended through May 31.

The modification program allows military borrowers to obtain a zero-interest, deferred-payment loan from the VA to cover missed payments and modify their existing VA loan to achieve affordable monthly payments for the duration of the extension, the statement said.  

The department plans to launch a new VA Servicing Purchase (VASP) program to allow the VA to purchase defaulted VA loans from mortgage servicers. This will allow federal officials to modify the loans and place them in the VA-owned portfolio as direct loans.

The National Consumer Law Center applauded the VA’s decision saying the foreclosure pause will give VA borrowers a much-needed opportunity to access the VASP program.

“The foreclosure pause is badly needed as veteran borrowers have had no meaningful alternatives to foreclosure for over a year,” said Steve Sharpe, senior attorney at the National Consumer Law Center.

Last week, a group of Democrat U.S. Senators – Sherrod Brown of Ohio, Jon Tester of Montana, Jack Reed of Rhode Island and Tim Kaine of Virginia – wrote a letter urging VA Secretary Denis McDonough to protect military borrowers from foreclosure.

“VA previously offered solutions to help borrowers exit forbearance and get back on track with their payments. But for more than a year, veterans have not had a viable option to bring their mortgages current, leaving them vulnerable to losing their homes,” the letter read.

“In the meantime, tens of thousands of veterans and service members are left with no viable options to get back on track with payments and save their homes. Stories from across the country show that this is already having severe consequences for veterans and their families.”

Over the past year, the department said it helped more than 145,000 military borrowers and their families keep their homes and avoid foreclosure.

Source: housingwire.com

The Federal Housing Finance Agency (FHFA) will revise the treatment of active single-family mortgages backed by government-sponsored enterprises Fannie Mae and Freddie Mac for which borrowers elected a COVID-19 forbearance under the Enterprises’ representations and warranties framework, according to its newest media release.

“Under the updated rep and warrant policies, loans for which borrowers elected a COVID-19 forbearance will be treated similarly to loans for which borrowers obtained forbearance due to a natural disaster,” the FHFA said. “As a result, loans with a COVID-19 forbearance will remain eligible for certain rep and warrant relief based on the borrower’s payment history over the first 36 months following origination.”

FHFA Director Sandra L. Thompson argued that homeowners, who needed more time to keep up with housing costs during the pandemic, benefited from a mortgage forbearance plan that would reduce or suspend mortgage payments.

“Forbearance was an invaluable tool for borrowers experiencing financial hardship due to the COVID-19 pandemic,” Thompson said. “Servicers went to great lengths to implement forbearance quickly amid a national emergency, and the loans they service should not be subject to greater repurchase risk simply because a borrower was impacted by the pandemic.”

The Enterprises’ existing rep and warrant policies with respect to natural disasters allow the time the borrower is in forbearance to be included when demonstrating a satisfactory payment history in the first 36 months following origination, the FHFA noted. These policies will now expand to loans for which borrowers elected a COVID-19 forbearance.

Thompson stressed the importance of helping current and prospective homeowners manage present housing conditions at the Mortgage Bankers Association Annual Convention last week.  “In a housing market like this one, it is all the more important that both our policies and the industry’s efforts align to support existing and aspiring homeowners,” Thompson said. “That is why I believe a model based on partnership and mutual feedback is necessary for us to achieve our shared goal of promoting affordable and sustainable housing opportunities.”

If you’re considering becoming a homeowner, it could help to shop around to find the best mortgage rate. Visit Credible to compare options from different lenders and choose the one with the best rate for you.

MORTGAGE RATES KEEP CLIMBING, BUT BUYERS CAN FIND THE BEST DEALS BY DOING THESE TWO THINGS: FREDDIE MAC 

Mortgage rates affecting affordability, buyers advised to build up down payments

Mortgage rates are continuing their ascent. The average 30-year fixed-rate mortgage rose to 7.63% for the week ending Oct. 19, according to the Freddie Mac’s latest Primary Mortgage Market Survey. This time in 2022, the 30-year fixed-rate was below 7%. 

Buyers may do well for themselves by browsing for the best home loans and making a considerable down payment. Freddie Mac’s Chief Economist Sam Khater said “in this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate.”

Freddie Mac announced last week the launch of DPA One®, a new tool that strives to help mortgage lenders quickly find and match borrowers to down payment assistance programs nationwide. 

“DPA One delivers a one-stop shop at no cost that brings lenders and their borrowers greater detail and visibility into these programs, while seamlessly connecting the right assistance program with the lender, housing counselors and borrowers who need this assistance the most,” Sonu Mittal, Freddie Mac’s senior vice president of and head of single-family acquisitions, explained.

“With research showing down payment is the single largest barrier to first-time homebuyers attaining homeownership, borrowers should also ask their lender about down payment assistance,” Khater said.

If you’re looking to buy a home, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.

MANY AMERICANS PREPARING FOR A RECESSION DESPITE SIGNS THAT SAY OTHERWISE: SURVEY

Housing market showing lackluster activity

By end of 2023, there is likely to have been around 4.1 million existing home sales in the U.S., which would mark the weakest year of home sales since the Great Recession of 2008, according to a Redfin report. 

Redfin’s Economic Research Lead Chen Zhao said current conditions have led to buyer and seller hesitancy across the board. 

“Buyers have been in a bind all year,” Zhao said. “High mortgage rates and still-high prices are making it harder than ever to afford a home, shutting many young people out of homeownership and causing homeowners to reevaluate whether 2023 is the right time to move. Mortgage rates are staying high longer than anticipated, keeping away everyone except those who need to move and pushing our sales projection for the year down to a 15-year low.

“The last time home sales were this low was during the Great Recession,” Zhao continued.

Redfin agents suggest that buyers invest in newly built properties which are performing more strongly than existing-home sales. Newly constructed homes saw sales increase 1.5% year-over-year in September as prices dropped about 4%, according to Redfin’s data. 

Based on the findings from a National Association of Realtors (NAR) report, the total amount of home sales decreased by 2% from August to September and have dropped 15.4% since September 2022.

Looking to reduce your home buying costs? It may benefit you to compare your options to find the best mortgage rate. Visit Credible to speak with a home loan expert and get your questions answered.

AFFORDABILITY KEEPING YOU FROM OWNING A HOME? HERE’S HOW YOU CAN GET READY

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Source: foxbusiness.com

Apache is functioning normally

Apache is functioning normally

However, the total completed loan workouts (repayment plans, loan deferrals/partial claims, loan modifications) from 2020 and onward that were current decreased by three basis points to 73.43% in August. “While there was a monthly decline in the performance of post-forbearance workouts in August, overall mortgage servicing portfolios remain resilient,” Walsh noted in the report. “Compared … [Read more…]

Apache is functioning normally

Apache is functioning normally

HELOC, Manufactured, Technology, Marketing, and Digital Tools; Central Banks and Inflation

<meta name="smartbanner:author" content="We now have a native iPhone
and Android app.
Download the NEW APP”>


This website requires Javascrip to run properly.

HELOC, Manufactured, Technology, Marketing, and Digital Tools; Central Banks and Inflation

By:
Rob Chrisman

7 Hours, 56 Min ago

If you want something sobering, almost mesmerizing, here’s a short drone video of the flood damage in Libya (at the 15 second mark you can see how it tore through the city). Fortunately not so sobering are some stats out of the United States. The U.S. homeownership rate in 2022 was even higher than before the COVID-19 pandemic at 65.8 percent compared to 64.6 percent in 2019. That rebound was driven largely by those aged 44 and younger. And who says Millennials aren’t buying homes? Homeownership continued to climb from the foreclosure crisis (2004) and Great Recession (2008), when rates dipped as low as 63.4 percent in 2016. Homeownership rates recovered approximately half of the 5.6 percent decrease from 2004 to 2016. In Hawai’i the homeownership rate is 59 percent, I bring up the Aloha State because American Savings Bank, First Hawaiian Bank, and Central Pacific Bank joined Hawaiʻi Community Lending, a Hawaiʻi-based nonprofit community development financial institution, in pledging to provide mortgage forbearances to Maui families impacted by the recent wildfires. (Today’s podcast can be found here and this week’s is sponsored by the Trade-In Mortgage powered by Calque. Homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home. Lenders can help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Today’s podcast features Greg Korn and Ben Petit in an interview from the New England Mortgage Bankers Conference.)

Lender and Broker Software, Products, and Services

In an era defined by technological advancements, Dark Matter Technologies LLC emerges as a transformative force in the mortgage origination landscape, marking its evolution from Black Knight Origination Technologies. Under the Perseus Operating Group of Constellation Software Inc., Dark Matter Technologies remains steadfast in its commitment to pioneering innovation. CEO Rich Gagliano aptly sums up the company’s vision: “Dark Matter Technologies is on a mission to revolutionize the mortgage origination business by supporting, growing, and aggressively innovating new and existing products.” With over 1,300 dedicated mortgage technology experts and a portfolio that includes Empower, AIVA, Exchange, and more, Dark Matter Technologies is poised to lead the industry into a new era of unparalleled transformation. Learn more about Dark Matter Technologies and their mission, here.

There is approximately $9T in agency or government MSR outstanding. Billions of dollars are being transacted daily and this volume requires disciplined loan accounting processes to record loans accurately, produce investor reporting, and power business decisions. SBO from SitusAMC is a comprehensive loan accounting and master servicing platform that reconciles daily and monthly servicer cash collections down to the penny, aiding in the discovery of potentially misplaced funds and enhancing the financial integrity of the entire process. Servicers using SBO produce accurate and timely details providing confidence that their investor reporting obligations are being met. Schedule a demo of SBO with SitusAMC’s client-focused experts.

“Did you hear Capacity’s big announcement at TMC Fall? We’ve acquired Denim Social! Together, we’re building a support automation platform that helps you automate support, connect more authentically with your borrowers, and close more loans, faster. Read the press release to learn more! We also gave away a personalized AI Assessment worth $10,000 to help mortgage lenders identify opportunities for improving their business with AI. Plus, our new GSE Search feature pulls accurate, up to date GSE regulations within seconds using generative AI. Want to join the AI in mortgage revolution? Meet the Capacity team today.”

A new era in loan origination has arrived. Mortgage Machine Services, an industry leader in digital origination technology to residential mortgage lenders, announced the launch of its namesake platform Mortgage Machine™, an out-of-the-box, all-in-one LOS designed to accelerate lenders’ operational velocity and support an end-to-end digital origination process. Developed by digital mortgage pioneer and industry veteran Jeff Bode, Mortgage Machine utilizes intelligent automation, configurable business workflows and a cloud-based infrastructure to optimize the entire loan lifecycle and create a seamless lending experience. Key platform features include AI-powered task automation, a scalable cloud-based infrastructure, flexible APIs, pre-configured workflows for retail and TPO channels, integrated document management and POS functionality. Mortgage Machine also offers all-in-one eClosing capabilities, including an eClose room, eNotes, eVault and RON, and utilizes MISMO SMART Doc® data and security standards. Visit here to get started on your digital transformation journey.

Blend Labs continues to be the mortgage industry’s leading technology platform. Core to the platform is Blend’s unique integration with Desktop Underwriter® (DU®) and LPA. These integrations help streamline your approval process for borrowers, with all the conditions lined up for your fulfillment team. Add in intelligent and automated follow-ups and you’ll get to the closing table faster and more efficiently. Putting this information at the loan officer’s fingertips creates a streamlined process and eliminates manual work which equals lower costs, higher pull-through, and increased revenue. See more ways that Blend is committing to innovation and continues to lead the way.

Looking for timely advice on how to capture more loan volume and improve your bottom line in a down market? Now is the time to explore ways to tap into new markets. Expanding your mortgage footprint through new products and channels or by reaching new geographies insulates your business against economic and interest rate volatility by diversifying your sources of volume and revenue. By setting the groundwork to connect with new borrower markets now, you’ll open new revenue possibilities for when the market inevitably recovers, positioning your business to hit the ground running and beat out the competition. Download this informative eBook from mortgage solutions provider Maxwell for actionable advice, including how to create your expansion plan and choose the offerings best suited to the markets you want to pursue. Click here to download Growing Your Mortgage Footprint: How to Launch New Loan Products, Channels & Geographic Expansions.

Broker and Correspondent Products

Build your book with AFR Wholesale® (AFR)! Now, get the chance to listen from and ask questions directly to AFR and Freddie Mac to turn those prospects to active pipeline at the next Why Wait webinar series covering Manufactured Home Financing on Wednesday, September 20th at 1 PM EST. Register here today! Have you and your borrowers looked into Manufactured Housing as an option? With unbeatable affordability, customization options that are very tailored, quick installation and trusted quality, manufactured homes are worth exploring. Especially with a top lending partner in AFR who has been an industry leader for over 25 years. This is a live webinar, and a recording will not be provided so make sure to join and get great insight and have the opportunity to ask questions and listen to scenarios! Visit AFR Wholesale, email [email protected], or dial 1-800-375-6071. AFR Wholesale® – Don’t wait. Register today!

“With Cash-Outs on the decline during this high interest rate environment, it is important to present your borrowers with different cash-out options. That is why Vista Point is announcing a brand new HELOC product coming soon, in addition to our existing Closed-End Second. Our HELOC product is being designed as a complement to our Closed-End Second to provide a full suite of Equity Solutions. Our HELOC will provide a specific solution for borrowers that want the optionality of an interest-only payment, or the ability to draw up and buy down their line during the 5-year draw period with no Appraisals up to $250k. Just like on our Closed-End Second offering, with HELOC loan amounts up to $550K and combined lien amounts up to $2.5M, your borrowers can get the cash they need without sacrificing their advantageous 1st mortgage rate. HELOC will be available for full doc and bank statements on OO and 2nd homes. For more information, reach out to us, or meet us at the Philly MBA to discuss.”

Capital Markets

We learned last week that prices in August rose by the largest monthly percentage in 15 months. However, that month-over-month inflation was widely expected due to a surge in gasoline prices. Underlying oil prices are also pointing towards further increases in September. Meanwhile, core prices were up 0.3 percent and core goods prices declined by 0.1 percent. Over the last three months core prices have increased at an annualized pace of 2.4 percent, the lowest three-month pace since March 2021. Retail sales rose faster than analysts’ expectations in August, also due to higher gas prices. Many analysts expect consumer spending to slow as excess savings built up over the pandemic have materially declined and credit is increasingly costly and difficult to obtain. Additionally, the resumption of student loan payments is expected to cut into discretionary spending. It will take more than expectations of slower spending before the Federal Reserve feels inflation is firmly under control.

What could move mortgage rates this week? The U.S. Federal Reserve, Bank of England, Bank of Japan, and the central banks of Norway, Sweden, and Switzerland are all announcing rate decisions after a spate of recent inflation data shows that price increases are alive and well. The Fed’s Federal Open Market Committee (FOMC), the action arm of “the Fed,” is not expected to raise rates. It’s unlikely that the commentary around the commitment to keep fighting inflation and higher rates for longer will change either, but it could tilt a little more to the hawkish side after a stronger-than-anticipated inflation report for August.

The week could also see some extra drama on the political front as the countdown continues toward a potential government shutdown on October 1 in addition to the battle between the United Auto Workers (UAW) union and Detroit automakers. The auto worker strike could complicate Fed Chair Powell’s bid for a soft landing. Union leaders are asking for a 36 percent wage increase over four years, to match the similar recent pay increase for top executives. The union also wants pay to rise automatically with inflation in the future, as it did before the financial crisis.

This week brings the aforementioned FOMC meeting that begins tomorrow and concludes on Wednesday with the Statement, updated SEP (where fed funds projections will be closely scrutinized), and Chair Powell’s press conference. The treasury will also be in the headlines with more coupon auctions scheduled: $13 billion reopened 20-year bonds tomorrow and $15 billion reopened 10-year TIPS on Thursday. The only scheduled, probably non-market moving, news out today is the NAHB Housing Market Index for September. We begin the week with Agency MBS prices roughly unchanged from Friday, the 10-year yielding 4.34 after closing last week at 4.33 percent, and the 2-year is at 5.00 percent.

Employment

Are you more energized, more encouraged, and more motivated to succeed today than yesterday? Zig Ziglar famously stated, “People often say that motivation doesn’t last. Well, neither does bathing; that’s why we recommend it daily.” “As an industry leader, Thrive knows that motivation, discipline, and belief in your ability to succeed is critical,” stated Randell Gillespie, National Sales Leader for Thrive Mortgage. “There is no better time than now to find ways to continually motivate your team, which is why we put so much focus on daily opportunities like these at Thrive. Through our weekly High-Performance Coaching Calls, our very own nationally-recognized Marketing Master, James Duncan, leads these motivating and educational experiences for results. The biggest names in the mortgage industry and thought-leadership have been part of our Thrive Nation broadcasts. We want everyone to be better today than yesterday. Start a conversation with us and find out how.

“The fall season is here, and now more than ever is the time to build rapport with your referral partners and clients to maintain a steady stream of business. At Guaranteed Rate Affinity, not only do we have the greatest number of products, but we have the tech platform for our loan officers to do business from anywhere. With PowerVP, you can do anything from creating loan applications to sending pre-approval letters all from your mobile phone. Anything you could do from your desk, you can now do on the go with PowerVP. Gone are the days of being chained to your desk and missing out on important moments. Primarily, it gives you a work-life balance you never thought possible. Luckily, we’re hiring the best of the best loan officers to leverage our tech platform to grow their business. Ready to learn more? Contact Tim McGraw to get started.”

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

If you recently lost your job and are worried about paying your student loans, you have several options to set your bill to $0.

Though the national unemployment rate was just 3.8% in August, up slightly from July, layoffs continue to hit workers in industries like tech, media, entertainment, fashion and consulting. Nearly 1,000 tech companies have collectively laid off some 230,000 workers so far in 2023, according to tech industry layoff tracker Layoffs.fyi.

To make matters even more stressful, federal student loan payments are set to resume in October, after more than three years of an interest-free payment pause that began in March 2020.

“Don’t feel bad if you have to make tough choices and reprioritize,” says Scott Stark, a senior financial planner at Financial Finesse, a workplace financial wellness company.

Here’s how you can make your student loans fit into your budget as you get back on your feet.

Evaluate your budget and spending

Check your budget and spending to see where you can cut back.

“It’s crucial to get an accurate sense of your essential expenses and rank them in order of priority,” says Akeiva Ellis, a certified financial planner and CFP Board ambassador. “Take the time to negotiate where it’s possible, and consider areas where you can trim your budget.”

Student loans often have options for pausing payments that debts like credit cards or auto loans do not.

“It’s just about staying afloat until you get that next job,” says John McCafferty, director of financial planning at Edelman Financial Engines, a financial advisory firm.

Contact your servicer

After a layoff, reach out to your student loan servicer or lender to learn about what assistance may be available to you, says McCafferty.

Your student loan servicer can walk you through relief options and their implications, help you update your payment amounts if you’re on an income-driven repayment (IDR) plan and answer other questions you may have.

Here are some specific relief options that could be available to you.

If you have federal student loans

Sign up for an income-driven repayment plan or recertify your income

You can sign up for an IDR plan at any time, including after a layoff.

Even if you’re already on an IDR plan, you’ll need to submit a new IDR application to update your income post-layoff. The application will ask why you’re submitting it; write that you are submitting early because you want your servicer to recalculate your payment immediately.

You only need to recertify your income for an IDR plan once a year. If you qualify for $0 payments, that’ll last until your next recertification deadline, even if you get a new job sooner. This can give you some extra breathing room as you catch up on other bills.

A new IDR plan called SAVE is a good option to explore. The income threshold to qualify for $0 payments is more generous under SAVE than other IDR plans at about $32,800 for a household of one.

And unlike other IDR plans or some unemployment deferments, unpaid interest will not build if you’re on the SAVE plan, which could save you a lot of money in the long run.

The ‘on-ramp’ is a temporary safety net

From Oct. 1, 2023, to Sept. 30, 2024, borrowers who don’t make payments won’t be penalized under a 12-month student loan “on-ramp,” including no defaults, decreased credit scores or garnished paychecks. However, this is not an extension of the payment pause.

But if you lose your job during the on-ramp, you can skip payments if needed without signing up for a deferment or forbearance. The on-ramp is automatic, so it will kick in even if you simply don’t pay your student loan bill.

The on-ramp isn’t for everyone, Stark says. Interest will still accrue, increasing the amount you may eventually pay back, and payments are still due. Pay your bills if you can, either under an IDR plan or another repayment plan.

Once the on-ramp expires in late 2024, borrowers who lose their source of income may need to consider other options.

Unemployment deferment

Borrowers can pause payments for up to three years with a student loan unemployment deferment. This route could be helpful for borrowers who are receiving unemployment benefits or actively job-hunting, says Ellis.

However, depending on the type of federal loan you have, a deferment could increase the amount of interest you’ll eventually pay.

If you have subsidized or Perkins loans and don’t want to sign up for SAVE, an unemployment deferment might be a better option than the on-ramp because subsidized loans don’t accrue interest during a deferment.

However, if you have unsubsidized or parent or grad PLUS loans and don’t want to sign up for SAVE, the on-ramp may be better. Interest will build on these types of loans during deferment, and if you don’t pay the interest as it accrues, it will be capitalized after your deferment period ends, which means it will be added to your loan principal. This could increase the total amount you’ll repay over the life of your loan since you’ll be paying interest on a larger principal sum. But with the on-ramp, interest won’t capitalize.

If you have private student loans

Private student loans offer fewer protections for unemployed borrowers than their federal counterparts. Your options will depend on your loan terms and lender.

For example, private student loan lenders Ascent and FundingU offer hardship forbearances, limited to 24 months over the life of your loan. Interest will accrue during your forbearance and capitalize after the period ends, and your repayment term will be extended.

To see what help is available after a layoff, like a temporary deferment or forbearance, contact your private student loan lender directly.

“Always remember, whether federal or private, that communication with your loan servicers is key,” says Ellis. “They’re there to help you navigate these challenging times.”

Source: nerdwallet.com

Apache is functioning normally

Mortgage rates fell to an all-time low on Thursday, according to the daily average tracked by Optimal Blue. The direction of interest rates this week will have a lot to do with what Federal Reserve Chairman Jerome Powell says at the end of the central bank’s policymaking meeting on Wednesday.

Powell is the man who has the most power over mortgage rates at the moment. In mid-March, he restarted a bond-buying program last used during the financial crisis to stimulate demand for Treasuries and mortgage-backed securities. The primary goal was to grease the wheels of markets locked up with investor fears about the economic fallout of the coronavirus. It also resulted in cheaper rates.

“The Fed has been dominating mortgage rates since the middle of March and what they do on Wednesday is going to be a continuation of that,” said Walt Schmidt, FTN Financial’s head of mortgage strategy. “I don’t think it’s possible to contemplate we’d be anywhere near this low in mortgage rates if it weren’t for the Fed.”

The likely scenario for Wednesday is the Fed will provide forward guidance that either reiterates its pledge to buy MBS “for as long as it takes,” or becomes even more accommodating as a new surge in COVID-19 infections slams the economy, Schmidt said.

Rates have tumbled almost a percentage point since the Fed began buying Treasuries and MBS in mid-March. The initial pledge made on March 15 to buy $500 billion in Treasury bills and $200 billion of mortgage-backed securities wasn’t enough to unfreeze the markets. The daily average mortgage rate hit a two-month high of 3.84% on March 19, as measured by Optimal Blue.

It’s what happened the following Monday that did the trick: In an announcement posted on the Fed’s website at 8 a.m., before the opening of U.S. stock markets, Powell said the central bank would make “unlimited” purchases of MBS – that’s when rates began falling.

In June, the Fed pledged to keep buying Treasuries and MBS to the tune of about $120 billion a month.

There are other factors in play, including the question of whether the Senate will act to extend the beefed-up unemployment benefits set to expire on Friday. The extra $600 has helped to keep jobless Americans current on their bills, including mortgage payments.

If forbearances or delinquencies begin to rise, it will exert upward pressure on mortgage rates as lenders add a “risk premium” that will counteract the Fed’s bond-buying efforts.

“The Senate is not expected to send its version to the House of Representatives until next week,” Diane Swonk, chief economist of Grant Thorton, said in a note to clients on Monday. “Some worry that Congress will not come up with a plan before the recess scheduled for Aug. 7. This is the rare time when I actually hope election-year politics and Congressional propensity to spend dominate the agenda.”

The House passed the Heroes Act in May that extended the unemployment benefits through January, increased funds for testing, and supplied monetary relief to states and communities hard-hit by expenses related to battling the pandemic. The Senate went on a two-week vacation before the July 4 holiday without debating it or negotiating its own COVID-19 relief legislation.

Source: housingwire.com

Apache is functioning normally

Rates for a 30-year and 15-year fixed mortgage fell to all-time lows this week as a resurgence in the pandemic caused investors to buy more bonds, including mortgage-backed securities.

The average rate for a 30-year fixed mortgage was 3.03%, down from 3.07% last week. That marks the lowest in a data series that goes back to 1971, Freddie Mac said in a statement Thursday. The average 15-year rate fell to 2.51%, the lowest in almost 30 years of data, according to the mortgage financier.

Mortgage rates fell as investors reacted to news of a record-setting COVID-19 resurgence in some of the nation’s biggest states. The surges erased optimism from last month’s economic reports showing the jobs market recovering quickly from the virus-induced recession.

The low mortgage rates will boost demand for housing, but it’s a delicate balance, said Sam Khater, chief economist of Freddie Mac. Bad economic news pushes mortgage rates down. However, if states are forced to close businesses again and job losses mount, it will eat into the reservoir of people eligible to purchase properties.

“The summer is heating up as record low mortgage rates continue to spur homebuyer demand,” Khater said. “However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth.”

The resurgence in the pandemic has “already been much worse than we anticipated, and further restrictions will likely be required in some states to bring the virus under control,” the economists led by Goldman Sachs Chief Economist Jan Hatzius said in a report issued on Saturday.

Mortgage rates have fallen as bond investors’ concerns about a surge in forbearances in April and May has subsided. If layoffs spike, those numbers will mount again, said Joel Naroff, president of Naroff Economics.

The beefed-up unemployment provision in the CARES Act, which adds $600 a week to state payouts in an effort to fully replace salaries, is set to expire on July 31.

“If you’re a middle-income household with a job loss, that $600 a week could mean the ability to pay your mortgage and if it goes away it could put pressure on the housing market in terms of either mortgages or rents,” Naroff said.

The Federal Reserve, which rescued the bond markets in March and April by restarting a fixed-asset-buying program used during the 2008 financial crisis, is still purchasing about $4.5 billion of mortgage-backed securities a day, said Walt Schmidt, FTN Financial’s head of mortgage strategy.

“If it weren’t for the Fed, mortgage rates would be a lot higher,” Schmidt said. “The Fed buying MBS is keeping rates low. The Fed can’t control Fannie Mae and Freddie Mac, but it’s controlling what it can.”

Source: housingwire.com