At a recent congressional hearing, Treasury Secretary Janet Yellen said that U.S. regulators are monitoring risks stemming from nonbank mortgage lenders, cautioning that a failure of one of them is possible due to market strains and a lack of access to deposits.
The Community Home Lenders of America (CHLA), which represents small and mid-sized nonbank independent mortgage banks (IMBs), appreciates the concerns regulators have about the so-called “shadow banking system” – nonbanks carrying out traditional bank financial activities. Failures of large cryptocurrency firms have harmed consumers and caused some economic panic. Firms that offer risky financial products should receive appropriate supervision like banks do.
But mortgage lenders simply don’t merit the alarms they seem to be generating. Last March, CHLA released a comprehensive report: rebutting the myths about nonbank IMBs being risky and explaining how IMBs’ business model of originate and sell significantly reduces risk.
Without risky assets on their books, turmoil in mortgage markets does not result in significant IMB losses. Instead, IMBs’ financial struggles have largely been focused on bringing down operating expenses to match a significantly reduced revenue based in response to the volume collapse in the mortgage refi business. Notably, if an IMB lender goes out of business, the main impact is — wait for it — the firm simply won’t be around to originate more mortgage loans.
As a result, we assume that FSOC’s concern is not mortgage lenders per se, but about a small handful of mega mortgage servicers. Mortgage servicers do hold assets on their books — mortgage servicing rights (MSRs) — that could decline in value. Moreover, servicers have financial requirements to advance funds to mortgage pools when a borrower does not make a mortgage payment. FSOC’s concerns are that nonbanks don’t have access to deposits (like banks do) to carry out this function.
The answer is not to clamp down on IMB lenders or servicers, but to create credit facilities commensurate with what banks enjoy, to enable servicers to perform this banking-like function.
So, in January 2023, CHLA wrote a letterto Ginnie Mae, asking Ginnie to expand its PTAP program, to increase liquidity for Ginnie servicer/issuers experiencing increases in advance responsibilities. Note we are not calling for a bailout — just a liquidity facility for this function.
And in October 2022, CHLA wrote a letter to FHFA asking that the Federal Home Loan Bank (FHLB) system use its advance capabilities to do the same for advances for Fannie Mae and Freddie Mac MBS. Both these actions would do far more to reduce risk than any more draconian actions FSOC might be contemplating for servicers.
CHLA is also asking regulators to be precise about IMBs and risk. Regulators should clarify that risks are limited to only a very small handful of mega servicers, and not to the much larger universe of nonbank IMBs. Regulators should publicly explain that the limited risks that do exist are not predominately a risk of financial loss, but a liquidity risk, arising from servicers’ obligation to effectively act as a banker to borrowers that don’t make mortgage payments.
We would also point out that an excessive focus on nonbank mortgage lender risk could divert attention from the more significant financial risks we confront. As nonbanks were on the receiving end of alarms over their financial strength, last March’s Silicon Valley Bank fiasco was followed by last week’s turmoil around New York Community Bank. While some are focused on the risks of single-family loans, the true threats to our financial stability are in the trillions of dollars of commercial real estate loans held by banks.
But the ultimate risk is that federal policy makers and members of Congress get caught up in the echo chamber of false myths about nonbank IMB lender risks — and pursue unnecessarily draconian policies which harm IMBs’ strong homeownership record. All of this comes at a time of the unparalleled twin challenges to homeownership affordability of skyrocketing mortgage rates and home prices still at near-record levels.
As our recent annual CHLA IMB Report chronicles, IMBs now originate over 80% of all new mortgage loans, demonstrably outperform banks in loans to minorities, and consistently do a much better job of access to mortgage credit for underserved first-time homebuyers than banks.
IMBs welcome scrutiny of both their finances and their performance in serving consumers’ mortgage needs. They just ask that a good narrative doesn’t get in the way of the facts.
Scott Olson is Executive Director of the Community Home Lenders of America (CHLA), the only trade group exclusively representing non-bank IMBs.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this story: Sarah Wheeler at [email protected]
The availability of mortgage credit increased in January, according to a report issued by the Mortgage Bankers Association (MBA) based on data sourced from ICE Mortgage Technology.
The MBA’s Mortgage Credit Availability Index (MCAI) increased in January to 92.7, or by 0.7% over December’s figure, based on initial benchmarking of the index to 100 in 2012. Rising figures indicate that credit standards are loosening, while tightened conditions are occurring when the MCAI trends downward.
The MCAI for conventional loans increased by 1.3% while the index for government loans stayed flat compared to December, the MBA explained in its data release. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.9% and the Conforming MCAI rose by 0.2%
The modest increase in mortgage credit availability stems from a greater number of conventional loan offerings, according to MBA senior vice president and deputy chief economist Joel Kan.
“However, overall credit availability remained close to 2012 lows, and the conventional index was close to its record low in the series dating back to 2011,” he said.
There are still other active headwinds to monitor despite the rise in these programs, however.
“Even though there was an increase in cash-out refinance programs available, credit supply overall is tight,” Kan explained. “The challenging lending environment has pushed many lenders to reduce costs by cutting back on certain aspects of their business, including exiting origination channels, which has contributed to lower credit supply.”
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After a long year, tax season is finally upon us. You’re probably getting all your ducks in a row—collecting all the information you need, choosing your tax software, and so on. If you’re a homeowner, you might be able to catch a few tax breaks—but can you get a tax break for buying a house?
If you itemize your deductions via Schedule A rather than claiming the standard deduction, you could be eligible for one or more home-related tax breaks. And if you work from home, you might be able to claim a home office deduction (more on that later). The information below is general information regarding these deductions. It is always best to consult a tax professional if you have any questions related to your specific situation.
Deductions vs. Credits
Many people mistake deductions for credits—but they’re not the same thing. Let’s take a closer look at both types of tax breaks.
Deduction
Deductions reduce your taxable income according to the highest federal income tax bracket you fall into. So, if you qualify for a $2,000 deduction, the amount of money you can be taxed on will be reduced by $2,000.
There are two types of deductions: standard and itemized. Standard deductions are specific amounts based on your filing status and are updated annually. Itemized deductions are specific amounts you paid during the taxable year and you should use itemized deductions when your total of allowable itemized deductions is higher than the standard deduction.
Credit
Credits lower your income tax liability by a fixed dollar amount. If you qualify for a $500 tax credit, you pay $500 less in taxes.
Good to know: Some tax credits are nonrefundable, so if you don’t owe a lot of tax to begin with, you don’t qualify for the entire credit. Other tax credits, like the Earned Income Tax Credit, are refundable, so you get the entire amount under any tax circumstances. The remaining amount of credit available that wasn’t needed to pay down your tax bill comes to you in your tax refund.
Nondeductible Home Expenses
Unfortunately, some homeownership expenses just aren’t deductible. These include:
Closing costs (title insurance, appraisals, etc.)
Depreciation
Domestic service
Down payment
Fire insurance
Mortgage insurance premiums
Mortgage principal
Utilities such as gas, electricity, and water
Common Homeownership Deductions
If you itemize your deductions, there are several homeownership deductions available.
Home Mortgage Interest Deduction
Arguably the most well-known tax break for homeowners, the home mortgage interest deduction (HMID) lets you deduct interest paid on your mortgage up to $750,000 (or $375,000 if married filing separately).
If you take out a home equity loan or a home equity line of credit (HELOC) to make home improvements or buy or build a primary or secondary residence, you can deduct the interest through 2025.
You can claim this deduction on Form 1040, Schedule A.
Property Tax Deduction
Do you pay property taxes monthly or yearly? In either case, both state and federal property taxes are tax deductible on your federal return. For tax year 2023, the deduction amount is capped at $10,000 for married couples filing jointly and $5,000 for other tax statuses.
You can also claim taxes paid at closing when you buy or sell your home and certain payments made to town or county tax assessors. However, you can’t claim taxes paid on commercial or rental property.
To claim this deduction, report your total state and local income taxes in box 5a on Schedule A of Form 1040.
Mortgage Points Deductions
A homebuyer can purchase mortgage points, also called discount points, at the time of closing to lower their interest rate. For example, buying one point may lower your interest rate by 0.25%.
You can either deduct these points in the year in which you opened the mortgage or over the mortgage term. There are limitations, which you can view on the IRS website.
You can file for this deduction using Form 1040, Schedule A.
Home Office Deduction
If you’re self-employed and work from home, you can claim a home office deduction. To do so, you have to prove that you’ve used a portion of your home exclusively for business purposes. In other words, your office or another “separately identifiable space” counts, but your bedroom doesn’t—even if you work on your laptop in bed. Voluntary, occasional, or incidental freelance work won’t entitle you to a home office deduction.
There are occasions where you don’t need to meet the exclusive-use test. These include:
If you use part of your home as a day care facility for children, disabled adults, or elderly individuals
If you use part of your home to store physical inventory or product samples
Deductible expenses include:
Refurbishment and repair costs
Depreciation
A portion of your rent or mortgage payment
A portion of your utility bill
Business insurance
Office supplies
You can’t deduct landscaping or lawn care costs unless you’re a gardener or you’re in the lawn care business.
You can also consider using the simplified method for claiming your home office. That allows you to deduct $5 per square foot of your home used for business purposes. Often, this is a much more convenient way to deduct your home office versus taking the time to itemize each of your expenses.
Important: Before 2017, traditional employees could claim unreimbursed employee business expenses that exceeded 2% of their adjusted gross income on their tax return, including home office expenses. The Tax Cuts and Jobs Act eliminated that option until at least 2026. So, if you have an employer, you can’t currently write off any unreimbursed expenses related to your home office.
To claim this deduction, you’ll need to complete Form 8829, Expenses for Business Use of Your Home as part of your tax return.
Rental Expenses Deduction
If you rent your home, you can deduct some landlord expenses on your taxes, including operating expenses, depreciation, and repairs.
You can only deduct costs associated with keeping the rental in good operating condition. For example, you could deduct the cost of repairing a full bathroom that flooded, but you couldn’t deduct the cost of renovating a half bath into a full bath.
To claim this deduction, complete Form 4562, Depreciation and Amortization (Including Information on Listed Property).
Medical Capital Expense Deduction
If you have a medical condition that requires you to make improvements to your home or install special equipment, you may be eligible to deduct some or all of their cost.
Common capital expense deductions include:
Constructing ramps to exterior doors to make entering and exiting the home easier
Widening doorways or hallways to allow for wheelchairs or other mobility equipment
Installing railings, support bars, and other bathroom safety modifications
Lowering or modifying cabinets to make them usable
Installing a lift or otherwise modifying stairways
Modifying warning systems, such as fire alarms and smoke detectors
To file this deduction, use Worksheet A Capital Expense Worksheet to determine your medical capital expenses and enter the total on your Schedule A (Form 1040).
Common Homeownership Credits
As a homeowner, you may also qualify for specific homeownership tax credits.
Mortgage Interest Credit
Some lower-income first-time homeowners may receive a Mortgage Credit Certificate (MCC) from their state or local government, subsidizing the purchase of their home up to $2,000 on mortgage interest.
This credit comes with a few stipulations. For example, you’ll have to deduct the total amount of the credit from the mortgage interest you deduct. See the instructions page of Form 8396 for a complete list of stipulations. You’ll need to submit this as part of your tax return to claim the credit.
Residential Clean Energy Credit
Formally the Residential Energy Efficient Property Credit, the Residential Clean Energy Credit has a credit rate of 30% through 2032 and can cover costs related to renovating or building a home that runs on clean energy.
Specific limitations vary based on the type of improvements made, but they can apply to:
Solar electricity
Solar water heating
Small wind energy
Geothermal heat pumps
Biomass fuel
Fuel cells
See the IRS website for more details.
To claim the credit, complete Form 5695, Residential Energy Credits Part I as part of your tax return.
Energy Efficient Home Improvement Credit
If you improve your home’s energy efficiency, you may qualify for the Energy Efficient Home Improvement Credit.
Qualifying improvements include:
Building envelope components
Home energy audits
Residential energy property (i.e., central air conditioners that meet the Consortium for Energy Efficient (CEE) highest efficiency tier)
Heat pumps and biomass stoves and boilers
Each improvement has specific limits and guidelines. Learn more at the IRS website.
To claim the credit, complete Form 5695, Residential Energy Credits Part II as part of your tax return.
Alternative Fuel Vehicle Refueling Property Credit
Owners of electric vehicles may opt to add a charging station to their home. If you did so in 2023, you may qualify for the Alternative Fuel Vehicle Refueling Property Credit when you file your taxes. However, currently, this credit applies only to homes in low-income or urban areas.
To claim the credit, complete Form 8911.
A Word About Capital Gains
Many people worry about the amount of capital gains tax they’ll pay on a home sale. If you plan to sell your primary home and believe you’ll make a profit, you can exclude up to $250,000 of the gain from your income, or $500,000 if you file a joint return with your spouse. But there’s a catch: You have to have lived at the home for a minimum period of two years before the sale.
How Much Does Buying a House Help With Taxes?
Do you get a tax break for buying a house? It depends! Based on your tax situation, you could take advantage of various tax breaks available to homeowners.
Most homeowner credits and deductions only apply if you itemize your return—and you’ll only know whether itemization is worth it after you complete your tax forms. If you’re looking for a simple solution for filing your taxes, use TaxAct. As you enter information into your return, TaxAct will recommend whether itemizing your deductions or claiming the standard deduction is better for you.
You don’t have to wait for tax season to save money! Get your free credit report card from Credit.com. See where you need to work to start improving your credit to prepare for home ownership.
Disclosure: All TaxAct offers, products and services are subject to applicable terms and conditions. Price paid is determined at the time of filing and is subject to change.
The TaxAct® name and logo are registered trademarks of TaxAct, Inc. and are used here with TaxAct’s permission.
PPE, Audit and Risk, AI/ML Adoption, Closed-End 2nd Products; Lenders and Court Cases; CRA News
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PPE, Audit and Risk, AI/ML Adoption, Closed-End 2nd Products; Lenders and Court Cases; CRA News
By: Rob Chrisman
Mon, Jan 29 2024, 10:57 AM
“Sometimes it takes me all day to get nothing done.” But things are always changing. When I was a kid I “got a drink of water.” Now kids “hydrate.” Really? A few years ago, a good originator could do 10-20 loans per month. Now, it is rumored that 80 percent of volume is being done by 40 percent of originators, and lenders have instituted minimum production numbers: “If you’re not funding 2 loans per month, we’re going to let you find success elsewhere.” Diving into 2023’s production via NMLS looking at 234,000 records, Ingenious found that only 24 percent of originators did 24 units or more! 30 percent did 18 or more units, 40 percent did 12 or more units, and 60 percent did 5 or more units. Has the “norm” changed? Certainly a portion of marketing has shifted to people under the age of 40s, and Mortgages with Millennials with Kristin Messerli and Robbie Chrisman talking about Overlooked Strategies to Win with Millennials tomorrow at 1PM ET. Today’s podcast can be found here and this week’s is sponsored by Calque. With The Trade-In Mortgage powered by Calque, lenders help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Truv’s Richard Grieser on the latest verification solutions and how lenders can combat fraud.
Lender and Broker Software, Products, and Services
Introducing The 2024 Lender Playbook: 4 Tips to Drive Profitability in a Recovering Market. How will the coming election, housing inventory, and Fed action impact the mortgage market (and your lending success) this year? There’s a lot going on in 2024, and market recovery won’t be straightforward. The good news? You can still build a strong, forward-thinking plan for resilience and profitability. Tenured industry experts from Maxwell’s senior team helped create this guide to teach you how to reduce costs, win borrower business, and capture intermittent loan volume as it reemerges in the market. To get a leg up on the competition and build agility into your business, click here to download The 2024 Lender Playbook: 4 Tips to Drive Profitability in a Recovering Market.
Unleash Opportunities with LoanStream’s new Closed End Seconds webinar on Tuesday, February 20th, for borrowers who want to tap into their equity without refinancing or help them save money by avoiding costly mortgage insurance. Plus, it’ll include an update on the upcoming CalHFA Dream For All Loan Program. Reserve you or your Team’s spot now for this informative webinar.
The human circulatory system is more than 60,000 miles long! Running a system that complex would take all your waking energy if it wasn’t automated by your brain’s blood-flow command center. As the command center of your mortgage operation, your LOS similarly coordinates hundreds of loan tasks at once so you can focus on building relationships and running your business. And soon, your LOS could become even more powerful, adaptive, and proactive thanks to AI and machine learning. But is your organization ready? A new blog from Dark Matter Technologies offers tips for building an AI/ML adoption strategy so you can plan today for a more productive tomorrow.
“In a year where companies are trying to differentiate themselves, MQMR has that solved. While we know culture eats strategy for lunch, leaders didn’t think this could be done in a virtual environment. Happy to report that MQMR has built a thriving culture with teammates in 14 states and 3 continents, a world-class employee NPS in the high 70s, and 50%+ of its clients are multi-product clients, many of whom have been doing business since 2011. For lenders seeking an audit, risk, and compliance partner, there’s only one to choose from, so choose the one that not only delivers results but someone who has a fun culture to work with! MQMR takes care of its teammates because MQMR knows those teammates take care of you. Check out our fun year-end video with an inside look at the beating heart of our culture and in case you missed Saturday’s Spotlight, MQMR was the featured company!”
Polly, leading provider of innovative mortgage capital markets technology and operator of the industry’s first cloud-native, commercially scalable product and pricing engine (PPE), just announced the appointment of industry powerhouse Troy Coggiola as COO. Coggiola’s appointment follows a record year for Polly, both in industry adoption and product innovation. As COO, Coggiola will lead Polly’s product, implementation, support, and design teams, ensuring seamless cross-organization collaboration as the company continues to scale. Coggiola is the latest in a string of notable leadership hires; Parvesh Sahi, former SVP of Business and Client Development for ICE Mortgage Technology, joined the company as CRO in 2023. Former Fannie Mae executive and industry veteran Andrew Bon Salle, as well as former Ellie Mae CEO and mortgage industry visionary Jonathan Corr sit on the company’s board of directors. Read the press release.
Legal News and Regulations
This has absolutely nothing to do with mortgages, but what happens in the court system can be puzzling. What is the value of a human life? 33-year old Bryn Spejcher, convicted of killing her boyfriend Chad O’Melia by stabbing him 108 times during a “cannabis-induced psychosis,” received two years’ probation and ordered to perform 100 hours of community service according to the Ventura County Star. That’s it. (Ventura County Superior Court Judge David Worley, appointed by Republican Governor Arnold Schwarzenegger.)
Connecticut Banking Commissioner Jorge L. Perez issued a temporary order to cease and desist against LoanSnap, Inc., and notifying LoanSnap that its state mortgage lender license will be revoked and a civil money penalty will also be issued against it. The charges against the California-based mortgage lender include alleged violations of the Truth in Lending Act and the Fair Credit Reporting Act, but the focus was on unlicensed origination activities. According to the allegations, department examiners discovered that from at least August 29, 2022, to December 2, 2022, LoanSnap employed individuals who were not licensed as mortgage loan originators in Connecticut yet acted as mortgage loan originators by taking residential mortgage loan applications, soliciting Connecticut borrowers for residential mortgage loans, and offering or negotiating terms of residential mortgage loans. These unlicensed mortgage loan originators worked in out-of-state call centers and their titles were described as “sales development representatives” or “call center representatives.”
The U.S. District Court for the Southern District of Florida denied Freedom Mortgage’s motion to stay a case filed by the CFPB after Freedom argued that judicial economy (the preservation of the court’s time and resources) favored the stay because the defendant’s pending motion to dismiss is premised on the same constitutional issue addressing the CFPB’s funding structure now before the Supreme Court. Orrick reports that, “In opposition, the CFPB argued that the Supreme Court may take months to issue a ruling, the public interest in enforcement of consumer protection laws, and the failure to show how an adverse ruling in the Supreme Court case would definitively result in dismissal of this case… The District Court sided with the CFPB, stating that as of now, the CFPB ‘is a valid agency that is entitled to enforce the consumer financial laws.’ With the stay denied, the court will now consider the defendant’s motion to dismiss.”
Mortgage banks don’t accept deposits, so can’t reinvest them in the local community. But that hasn’t stopped some states from pushing CRA requirements onto some institutions. The Illinois Department of Financial and Professional Regulation issued a proposed rule pursuant to the Illinois Community Reinvestment Act (ILCRA). The ILCRA is modeled off the Community Reinvestment Act but expands its scope of covered financial institutions to include credit unions and licensed entities. Orrick reports that, “The proposed rule establishes a framework and criteria by which the Department will evaluate a covered mortgage licensee’s record of helping to meet the mortgage credit needs of Illinois, including low- and moderate-income neighborhoods and individuals, through different tests and performance standards depending on the number of loans made by a covered mortgage licensee. Tests and considerations for evaluating licensees’ record include a lending test, service test, performance record, data collection and reporting, and content and recordkeeping of information received from the public.
“To mitigate the impact on small businesses, a licensee that has made less than 200 home mortgage loans in Illinois in the last calendar year will not be subject to the service test. Furthermore, licensees that made less than 100 home mortgage loans in Illinois in the previous calendar year will have less frequent examinations than those with more than 100. Based on the licensee’s performance under the lending and service tests, the proposed rule specifies that a licensee’s rating of ‘outstanding,’ ‘satisfactory,’ ‘needs to improve,’ or ‘substantial noncompliance’ will affect how frequently they are evaluated. Compliance with the proposed rule is required six months from its effective date, and comments are due by February 26.”
Capital Markets
Last week closed with economic growth in the fourth quarter beating forecasts as gross domestic product increased 2.5 percent for the year. Importantly, the PCE Price Index, the inflation number that matters most to the Fed, rose 0.2 percent month-over-month, as did the core rate which excludes food and energy. Trends in annual inflation numbers continue to move lower and now sit at an almost three-year low, even with strong holiday spending. That report capped a year that began with economic “experts” warning the public of a guaranteed American recession, but inflation retreated at a much faster rate than the Fed anticipated, all while a robust job market kept driving consumer spending. The most recent data has led to more optimism that the economy can power through the Fed’s efforts to corral inflation.
This week is packed with market moving potential including the latest Federal Open Market Committee decision followed by Chair Powell’s press conference on Wednesday afternoon with the Quarterly Refunding announcement Wednesday morning. The December jobs report will be released on Friday where early estimates are for an increase of 178k in headline payrolls (versus 216k in December). Besides payrolls, the U.S. calendar includes updates on home prices, ADP employment, productivity / unit labor costs, manufacturing PMIs with factory orders and Michigan sentiment. Sweden’s Riksbank and the BoE will release their latest decisions on Wednesday and Thursday morning.
Today’s calendar sees just one data point, the non-market moving Dallas Fed Texas manufacturing for January, due out during the day. There are some short-duration Treasury auctions, and the Quarterly Refunding estimate will be announced. We begin the week with Agency MBS prices better by .125-.250, the 10-year yielding 4.10 after closing Friday at 4.16 percent, and the 2-year is at 4.33.
Employment and Transitions
“We are looking for “The Best Account Executive Ever.” If this should be your title, contact me, [email protected]. Outstanding Account Executives understand the value of their relationships and so do we. Yes, product expertise is essential but first-rate relationship management puts you head and shoulders above your competition. Explore your options with Freedom Mortgage Wholesale. We are Historically, Currently and 4EVER Wholesale. Let’s connect today. Everyone wants rates to structure winning loans for their borrowers. Have you seen what Freedom is offering? Freedom Mortgage Wholesale is making brokers and borrowers happy. Check out our FHA and VA rates for best execution…for free on LenderPrice. Reach out to Freedom for more information at 855.915.4800. Freedom Mortgage Wholesale is Historically, Currently and 4EVER Wholesale.
A&D Mortgage announced the hiring of Tommy Williams, Betsy Marvin, and Lori Welton as Account Executives. “These three industry veterans bring a wealth of experience and expertise to A&D Mortgage, especially in the Conventional mortgage business” and join recent hires Andrew Taylor and Bobby Frank. Andrew Taylor is now A&D’s Senior Vice President of Wholesale Lending Sales and Bobby Frank is Senior Vice President of Wholesale Lending Strategy. Congratulations all around!
FHA Program Analyst (Computerized Home Underwriting Management System (CHUMS) Coordinator) in Santa Ana, CA. Job duties include coordinating activities related to the CHUMS
Lender Access System (CLAS). Update software to the CKAS system to permit enhancements. Monitor and assign program code identifiers for CHUMS users. Analyze CHUMS data and develop new methods of correlating and disseminating. FHA Job Announcement 24-HUD-589-P.
FHA Senior Single Family Housing Specialist (Quality Assurance Division) Job duties include acting as HUD expert and advisor required for compliance on the lender origination and servicing practices. Prepare correspondence, technical back-up documentation, status reports, schedules, and other information. Identify actions necessary for the correction of the lender’s deficiencies. FHA Job Announcement 24-HUD-587-P.
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Patriot Bank has agreed to pay $1.9 million to settle a probe into allegations the lender avoided providing mortgage services to majority-Black and Hispanic neighborhoods in Memphis and discouraged people seeking credit in those communities from obtaining home loans, the Justice Department said Wednesday.
From 2015 through at least 2020, other banks received nearly 3.5 times as many loan applications compared to Patriot in majority-Black and Hispanic neighborhoods in Memphis, the agency said.
Under the proposed consent order, Patriot will invest at least $1.3 million in a loan subsidy fund to increase home mortgage, home improvement and home refinance for majority-Black and Hispanic neighborhood residents.
Dive Insight:
Wednesday’s agreement comes more than two years after the DOJ announced a coordinated effort to fight discrimination against communities of color alongside the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. With the Patriot settlement — the 11th redlining case since 2021 — the initiative will secure over $109 million in relief.
“The Justice Department is dedicated to stamping out discriminatory lending practices across this country and we are vigorously committed to holding lenders accountable, no matter their size,” Assistant Attorney General Kristen Clarke of the Justice Department’s civil rights division said in a statement Wednesday. “This settlement will provide many Memphis families with access to credit that will improve the quality of their lives while opening up opportunities to build intergenerational wealth.”
Patriot Bank, a community bank with eight branches serving residents in Memphis and Shelby, Tipton and Fayette counties, co-operated with the department’s investigation and worked with it to resolve the redlining allegations, the DOJ said.
“Patriot Bank has always acted to serve the home mortgage credit needs in minority neighborhoods, and the bank’s strong record speaks for itself and flatly contradicts any allegation of wrongdoing,” John Smith, president and CEO of Patriot Bank, said in a statement. “We are proud of our record and strongly deny that Patriot Bank ever avoided originating home mortgage loans in Black and Hispanic areas of the Memphis market.”
The DOJ alleged that during the six-year period, Patriot’s home mortgage lending was focused “disproportionately” on White areas around the City of Memphis.
“Even when Patriot generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white,” the DOJ said.
Under the proposed consent order, Patriot will spend $375,000 for advertising, outreach, consumer financial education and credit counseling focused on majority-Black and Hispanic neighborhoods. Patriot must also invest $225,000 in community partnerships to provide services that increase residential mortgage credit access for residents of those areas.
Patriot will also dedicate two mortgage loan officers to serve majority-Black and Hispanic neighborhoods in the bank’s service area and employ a director of community lending to oversee the continued lending development in communities of color.
The DOJ said it investigated Patriot’s lending practices after receiving a referral from the bank’s regulator, the Board of Governors of the Federal Reserve System.
Patriot said it voluntarily collaborated with the agency to resolve the allegations made against the lender.
“The bank entered into a Consent Order with the DOJ because the terms of the agreement affirm and adopt the programs and actions that the bank has already been implementing on its own for many years to help meet mortgage credit needs in the communities it serves, including its investment of $1.9 million in reaching and serving communities of color, as the Consent Order itself states,” the bank said in a statement.
Recently, Patriot partnered with a leading community development organization and the City of Memphis to finance a residential subdivision in a low-income and Black neighborhood in South Memphis, the bank said.
This is the third time Memphis has been in the news for a redlining probe since an effort to curb discrimination against communities of color was launched in 2021 by Attorney General Merrick B. Garland and Clarke.
In October 2021, the DOJ, CFPB and OCC announced a $5 million settlement with Trustmark Bank over allegations the $17 billion-asset Jackson, Mississippi-based bank engaged in discriminatory lending practices in Memphis from 2014 to 2018.
Almost a year later, in September 2022, the DOJ announced an agreement with Evolve Trust and Bank, headquartered in Memphis, to settle lending discrimination based on race, sex and national origin in the pricing of its residential mortgage loans from at least 2014 through 2019.
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter.
Refinance applications increased 11% week over week and 10% year over year. Despite the overall rise in mortgage applications, the refinance share of total activity slightly decreased to 37.5% from 38.3% the week before. Purchase mortgage applications climbed 9% week over week on a seasonally adjusted basis and 28% on an unadjusted basis. However, purchase … [Read more…]
Commercial/Multifamily Mortgage Delinquency Rates MBA Research Mortgage Credit Availability Index Press Release Residential
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WASHINGTON, D.C. (January 16, 2024) — Delinquency rates for mortgages backed by commercial properties increased during the fourth quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.
“Ongoing challenges in commercial real estate markets pushed the delinquency rate on CRE-backed loans higher in the final three months of 2023,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Delinquency rates jumped to 6.5 percent of balances for loans backed by office properties and to 6.1 percent for lodging-backed loans. Delinquencies for loans backed by retail properties remain elevated from the onset of the pandemic but were unchanged during the quarter. Delinquency rates for multifamily and industrial property loans both increased marginally but remain much lower.”
Woodwell continued, “Long-term interest rates have come down from their highs of last year, which should provide some relief to some loans, but many properties and loans still face higher rates, uncertainty about property values and – for some properties – changes in fundamentals. Each loan and property faces a different set of circumstances, which will come into play as the market works through loans that mature this year.”
The balance of commercial mortgages that are not current increased in December 2023 (compared to September 2023).
96.8% of outstanding loan balances were current or less than 30 days late at the end of the third quarter, down from 97.3% at the end of the third quarter of 2023.
2.3% were 90+ days delinquent or in REO, up from 2.2% the previous quarter.
0.3% were 60-90 days delinquent, up from 0.2% the previous quarter.
0.6% were 30-60 days delinquent, up from 0.3%.
Loans backed by office properties drove the increase.
6.5% of the balance of office property loan balances were 30 days or more days delinquent, up from 5.1% at the end of last quarter.
6.1% of the balance of lodging loans were delinquent, up from 4.9%.
5.0% of retail balances were delinquent, flat from the previous quarter.
1.2% of multifamily balances were delinquent, up from 0.9%.
0.9% of the balance of industrial property loans were delinquent, up from 0.6%.
Among capital sources, CMBS loan delinquency rates saw the highest levels.
5.1% of CMBS loan balances were 30 days or more delinquent, up from 4.4% last quarter.
Non-current rates for other capital sources remained more moderate.
0.9% of FHA multifamily and health care loan balances were 30 days or more delinquent, up from 0.8%.
0.9% of life company loan balances were delinquent, up from 0.7%.
0.5% of GSE loan balances were delinquent, up from 0.4%.
MBA’s CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of December 28, 2023. This month’s results build on similar surveys conducted since April 2020. Participants reported on $2.7 trillion of loans in December 2023, representing 58 percent of the total $4.6 trillion in commercial and multifamily mortgage debt outstanding (MDO).
While the dream of homeownership might seem elusive on a tight budget, the availability of low income home loans offers a beacon of hope.
These specialized loans come in handy, particularly when the obstacles of saving for a down payment loom large—a common hurdle if you’re already strapped with rent payments.
So if you’re wondering how to bridge the financial gap between renting and owning, read on to explore the various low income home loan programs that could unlock the door to your future home.
Verify your home buying eligibility. Start here
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Can I buy a house with low income?
Yes, you can buy a house with a low income by qualifying for housing assistance programs and special mortgage loans. That’s because there is no minimum income requirement to buy a house.
However, your ability to do so will depend on a variety of factors specific to your financial situation. A mortgage lender will examine your credit score, debt-to-income ratio, and down payment to determine if you qualify.
Check your mortgage eligibility. Start here
What are low income home loans?
The path to homeownership can be fraught with challenges, particularly for those with limited financial resources. Enter low income home loans—a specialized type of mortgage designed to level the playing field for buyers facing financial barriers.
Low-income mortgage programs focus on addressing the common challenges that low-income earners encounter, such as managing debt, maintaining less-than-stellar credit scores, and struggling to save for a significant down payment.
Verify your home buying eligibility. Start here
Minimal down payment requirements: One of the most daunting aspects of buying a home is accumulating a large down payment. Low income home loans often require smaller down payments, making it easier for buyers to make the initial leap.
Lenient credit criteria: Having a perfect credit score is not always feasible, especially when living on a limited income. These loans often have more flexible credit requirements, allowing for a broader range of credit histories.
Reduced costs at closing: High closing costs can be another hurdle. Low income home loan programs may offer reduced or even waived closing costs in certain circumstances.
Competitive mortgage interest rates: High interest rates can quickly make a mortgage unaffordable. Low income home loans often feature competitive interest rates, reducing long-term costs.
Lower mortgage insurance premiums: Some programs offer reduced premiums for mortgage insurance, further lowering monthly payments.
Interestingly enough, some of these programs often have income caps, essentially barring applicants who have incomes that are considered too high. This ensures that the programs benefit those who need them most.
Requirements for low income home loans
Your ability to qualify for a loan is not solely based on your income. Lenders will assess your debt-to-income (DTI) ratio, a key metric that represents your monthly debts as a percentage of your monthly income. Generally, a DTI under 35% is viewed as favorable, making you a more appealing candidate for a mortgage.
If saving a down payment is your chief concern, don’t worry; there are plenty of options that require minimal, or sometimes zero, down payments. Despite common misconceptions, a 20% down payment is not a universal requirement.
Additional Assistance
Beyond the loan itself, there are various homebuyer assistance programs that can help with the down payment and closing costs. Some of these are structured as grants that don’t require repayment, making it easier to achieve the dream of owning a home.
Navigating the complexities of mortgages and home buying can be intimidating, but low income home loans and assistance programs offer a lifeline to those who dream of owning their own home. These financial products and services are tailored to alleviate the most common obstacles, offering a viable path to homeownership for those who may have thought it was out of reach.
Low income home loans
Low income home buyers have plenty of loan options and special assistance programs to help with a home purchase. Here’s what you can expect.
Check your mortgage eligibility. Start here
Loan Type
Credit Score
Down Payment
Unique Requirements
HomeReady
Generally 620
As low as 3%
Income limits based on area, homebuyer education course required
Home Possible
Generally 660
As low as 3%
Must be primary residence, income limits may apply, can include 1-4 unit properties
Must be a qualifying service member, veteran, or eligible spouse; primary residence only
USDA Loans
Usually 640
No down payment required
Must be in a qualifying rural area, income limits apply, primary residence only
HomeReady and Home Possible mortgages
Fannie Mae’s HomeReady program and Freddie Mac’s Home Possible loan are geared toward lower-income home buyers. You need only 3% down to qualify, and there is no minimum “required contribution” from the borrower. That means the money can come from a gift, grant, or loan from an acceptable source.
Even better, the home seller can pay closing costs worth up to 3% of the purchase price. Instead of negotiating a lower sales price, try asking the seller to cover your closing costs.
Private mortgage insurance (PMI) may also be discounted for these low income home loans. You’re likely to get a lower PMI rate than borrowers with standard conventional mortgages, which could save you a lot of money from month to month.
“This is the biggest benefit,” says Jon Meyer, The Mortgage Reports loan expert and licensed mortgage loan originator. “The PMI is offered at a lower rate than with a standard conventional loan.”
Finally, Home Possible and HomeReady might make special allowances for applicants with low incomes. For instance, HomeReady lets you add income from a renter on your mortgage application, as long as they’ve lived with you for at least a year prior. This can help boost your qualifying income and make it easier to get financing.
You might qualify for HomeReady or Home Possible if your household income is below local income limits and you have a credit score between 620 and 660.
FHA loans
FHA loans offer flexible approval requirements for repeat and first-time home buyers alike. This program, which the Federal Housing Administration backs, relaxes borrowers’ standards to get a mortgage. This can open up the home-buying process to more renters.
You might be able to get an FHA home loan with a debt-to-income ratio (DTI) up to 45% or a credit score as low as 580 while paying only 3.5% down
Select FHA lenders even allow credit scores as low as 500, provided the buyer can make a 10% down payment
Thanks to these perks and others, the FHA loan is one of the most popular low-down-payment mortgages on the market.
Check your FHA loan eligibility. Start here
VA loans
Veterans Affairs-backed VA loans provide military homebuyers with a number of advantages.
No down payment requirement. You can finance 100% of the purchase price. You can also refinance 100% of your home’s value using a VA loan
No mortgage insurance. But you will pay a one-time VA Funding Fee. You can wrap it into the loan amount.
No minimum credit score. Although lenders are allowed to add their own minimums. Those that do often require a FICO score of at least 580 to 620.
Sellers can pay up to 4% of the purchase price in closing costs. So if you find a motivated seller, you could potentially get into a home with nothing out of pocket
If you’re a veteran, active-duty service member, or surviving spouse, the VA mortgage program should be your first stop.
Check your VA loan eligibility. Start here
USDA loans
If you’re not buying in a large city, you may qualify for a USDA home loan. Officially called the Single-Family Housing Guaranteed Loan Program, the USDA loan was created to help moderate- and low-income borrowers buy homes in rural areas.
With a USDA loan, you can buy a home with no money down. The only catch is that you must buy in a USDA-approved rural area (though these are more widespread than you might think). You can find out if the property you’re buying is located in a USDA-eligible rural area and whether you meet local income limits using the USDA’s eligibility maps.
Your monthly payments might be cheaper, too. That’s because interest and mortgage insurance rates are typically lower for USDA loans than for FHA or conforming loans.
There are two types of USDA loans.
The Guaranteed Program is for buyers with incomes up to 115% of their Area Median Income (AMI)
The Direct Program is for those with incomes between 50% and 80% of the AMI
Standard USDA-guaranteed loans are available from many mainstream lenders. But the Direct program requires borrowers to work directly with the U.S. Department of Agriculture.
You typically need a credit score of 640 or higher to qualify.
Check your USDA loan eligibility. Start here
Low income home loan programs
Aside from mortgages that are designed to help people with low incomes buy a home, there are also a number of other programs that offer help to make homeownership more accessible.
Verify your home buying eligibility. Start here
Program
Description
Who Is Eligible
Hud Homes
Discounted homes sold by the Department of Housing and Urban Development.
Low- to moderate-income families, with preference for those who will make it their primary residence. May include single-family homes.
Housing Choice Voucher Program
Vouchers to subsidize the cost of housing in the private market.
Low-income families; must meet income and other criteria set by state and local housing programs.
Good Neighbor Next Door
Significant discounts on homes for teachers, firefighters, police officers, and EMTs.
Must commit to living in the property as a primary residence for at least 36 months. Includes single-family homes.
HFA Loans
Loans offered by state Housing Finance Agencies with reduced interest rates and down payment assistance.
First-time or repeat buyers with low to moderate incomes must meet income requirements. Often, it must be a primary residence.
Down Payment Assistance
Grants or loans to cover the down payment and sometimes closing costs.
Typically for low- to moderate-income families, though criteria can vary by program. Often for single-family homes.
State or Local Assistance
Various grants, loans, or tax credits are offered at the state or local level.
Eligibility varies but usually targets low- to moderate-income families. May include single-family homes.
Mortgage Credit Certificates
Tax credit to reduce federal income tax liability.
First-time homebuyers who meet income requirements; must be primary residence.
Manufactured and Mobile Homes
Loans or grants specifically for manufactured or mobile homes.
Low- to moderate-income families; must meet criteria set by specific housing programs. Usually must be primary residence.
Hud Homes
When the FHA forecloses on homes, those properties are often put up for sale as HUD Homes. And, you can generally purchase one at a steep discount. To qualify for a HUD Home, it will need to be your primary residence for at least 12 months. Additionally, you must not have purchased another HUD in the past 24 months.
Keep in mind that HUD Homes are sold as-is. Many are fixer-uppers. Moreover, HUD Homes are purchased through a bidding process. You’ll need a real estate agent or mortgage broker licensed with HUD to bid on an FHA property.
You can find HUD Homes on the official HUD website, hudhomestore.com. There, you’ll see all HUD real estate owned (REO) single-family properties in your area.
Good Neighbor Next Door
The Good Neighbor Next Door program offers unique benefits for nurses, first responders, and teachers. If you’re eligible, you can buy HUD foreclosure homes at a 50% discount. Use an FHA mortgage, and you only need $100 for a down payment.
You can find the homes on the U.S. Department of Housing and Urban Development website. You’ll also need a HUD-licensed real estate agent to put your offer in for you.
If your offer is accepted and you qualify for financing, you get the home. The 50% discount makes homeownership a lot more affordable. However, be aware that this discount is actually a second mortgage. But it has no interest and requires no payments. Live in the home for three years, and the second mortgage is forgiven entirely.
HFA home loans
Not to be confused with FHA loans, HFA loans are offered in partnership with state and local Housing Finance Authorities.
Many HFA loans are conventional mortgages backed by Fannie Mae and Freddie Mac. They may require as little as 3% down, and many HFA programs can be used with down payment assistance to reduce the upfront cost of home buying.
Borrowers who qualify for an HFA loan might also be in line for discounted mortgage rates and mortgage insurance premiums. To qualify, you’ll typically need a credit score of at least 620. But eligibility requirements vary by program.
Find and contact your state’s public housing finance agency or authority to learn more and see if you qualify. Also, be aware that this type of loan program will require additional approval steps that may make loan closing take longer.
Down payment assistance programs (DPAs)
Down payment assistance is exactly what it sounds like. It provides help with down payments on home purchases and often closing costs. Government agencies, nonprofits, and other sources commonly offer down payment and closing cost assistance. They are usually in the form of a grant or loan (though the loans may be forgiven if you stay in the house for five to ten years).
Most DPA programs target low-income home buyers and have guidelines that make qualifying easier. Some, however, provide assistance to people who buy in “underserved” or “redevelopment” areas, regardless of income. Many DPA programs offer assistance worth tens of thousands of dollars.
Talk to a lender about your options. Start here
Mortgage Credit Certificates (MCCs)
Mortgage credit certificates (MCCs) can stretch your home-buying power. If you meet income requirements, you could get a tax credit equal to some percentage of your mortgage interest. Lenders are allowed to add this credit to your qualifying income when underwriting your mortgage. This allows you to qualify for a higher mortgage amount than you otherwise could.
There are numerous states, counties, and cities that issue mortgage credit certificates, and their regulations and amounts vary greatly. Check with your local housing finance authority to find out whether MCCs are available where you live.
Housing Choice Voucher Program
The Housing Choice Voucher homeownership program (HCV) provides both rental and home buying assistance to eligible low-income households. Also known as Section 8, this program allows low-income home buyers to use housing vouchers to purchase their own homes.
Because local public housing agencies run these voucher programs, eligibility varies depending on location. Still, you’ll likely need to meet the following requirements:
Program-specific income and employment conditions
Being a first-time home buyer
Completing a pre-assistance homeownership and counseling program
Keep in mind that not all states offer voucher programs, and some programs have waiting lists. Also, these programs could limit how much you can sell the home for later on. To find out if your area offers a participating program, use the HUD locator web tool.
Manufactured and mobile homes
A manufactured home usually costs less than a traditional, site-built home. When placed on approved foundations and taxed as real estate, manufactured homes can be financed with mainstream mortgage programs.
Many programs require slightly higher down payments or more restrictive terms for manufactured homes. HomeReady, for example, increases the minimum down payment from 3% to 5% if you finance a manufactured home. Other programs require the home to be brand new.
Additionally, there are often requirements regarding the year the home was built and the property’s foundation. These guidelines will vary between lenders. Mobile homes that are not classified as real estate can be purchased with personal loans like the FHA’s Title 2 program. These are not mortgages because the homes are not considered real estate.
Check your mortgage options. Start here
Tips for buying a house with low income
Whether you’re buying a new home or your first home, these tips can help you achieve your homeownership goals.
Verify your home buying eligibility. Start here
Improve your credit history
Improving your FICO score is the best way to increase your chances of loan approval and qualify for lower mortgage rates.
The credit score needed to purchase a home varies depending on the type of loan you apply for. Conventional loans typically require a score of at least 620, while FHA loans often require at least 580.
Start by pulling free credit reports from annualcreditreport.com to determine your current score. Next, consider a few of the common methods for increasing credit scores. The amount of work that you’ll need to do will depend on your personal financial situation.
As an example, if your credit score is low because you’re using too much of your available credit, you may benefit from a debt consolidation loan to tame your high-interest account balances and improve your credit utilization.
On the other hand, if your credit history reveals missed payments, you’ll need to show at least 12 months of regular, on-time payments to improve your score.
Save for a down payment
The average first-time home buyer puts just 13% down on a new home. Yet, many loan programs require as little as 3% down or no down payment at all.
Remember that you still have to pay closing costs, which are typically around 2% to 5% of your mortgage loan amount. If you put less than 20% down, you’ll almost certainly have to pay for mortgage insurance.
In addition, you may need cash reserves in your savings account. This assures lenders that you can make your monthly mortgage payments should you suffer a financial setback. However, don’t let the down payment scare you away from homeownership. Many buyers qualify without even knowing it.
Pay down debts
Paying down debts will lower your debt-to-income ratio and improve your odds of mortgage approval. This is especially true for those with high-interest credit card debt.
You’ll likely qualify for lower rates when you have:
A low debt-to-income ratio (DTI)
High credit score
3% to 5% down payment
Stable income for the past two consecutive years
Use a first-time home buyer program
First-time buyer programs offer flexible guidelines for qualified buyers. Plus, these special programs exist in every state to help low-income households achieve homeownership.
Unlike traditional conventional loans, the government backs many first-time buyer mortgages. This allows mortgage lenders to offer loans with better rates and lower credit score requirements than they normally would be able to.
Verify your low income home loan eligibility. Start here
Model your budget
Owning a home requires more than qualifying for a loan and making monthly mortgage payments. Homeowners are responsible for a variety of ongoing costs, including:
Homeowners insurance
Property taxes
Mortgage insurance (in many cases)
Utility bills
Ongoing home maintenance
Home improvements
Appliance repair and replacement
Home buyers who have experience paying these ongoing costs of homeownership will be better prepared for the big day when they get the keys to their dream home.
Plus, sticking to this model budget in the months and years before purchasing a home and then saving the money you would spend on housing costs, such as insurance premiums and utilities, is a great way to build cash reserves and save for a down payment.
Use a co-signer
If you’re on the edge of qualifying for your own loan, using a co-signer may be an option.
Essentially, when you buy a house with a co-signer, you and your co-signer are both responsible for making the monthly payments. You’ll both also build and share in the home’s equity. Purchasing a home with a co-signer is quite common among unmarried couples, friends, and family members.
FAQ: Low income home loans
Verify your home buying eligibility. Start here
How do you buy a house with low income?
To buy a house with a low income, you have to know which mortgage program will accept your application. A few popular options include: FHA loans (allowing low income and as little as 3.5 percent down with a 580 credit score); USDA loans (for low-income buyers in rural and suburban areas); VA loans (a zero-down option for veterans and service members); and HomeReady or Home Possible (conforming loans for low-income buyers with just 3 percent down).
I make $25K a year; can I buy a house?
Mortgage experts recommend spending no more than 28 percent of your gross monthly income on a housing payment. So if you make $25K per year, you can likely afford around $580 per month for a house payment. Assuming a fixed interest rate of 6 percent and a 3 percent down payment, that might buy you a house worth about $100,000. But that’s only a rough estimate. Talk with a mortgage lender to get the exact numbers for your situation.
How do I qualify for a low-income mortgage?
Whether or not you qualify for a low income home loan depends on the program. For example, you might qualify for an FHA mortgage with just 3.5 percent down and a 580 credit score. Or, if your house is in a qualified area and you’re below local income caps, you might be able to get a zero-down USDA mortgage. Veterans can qualify for a low-income mortgage using a VA loan. Or, you can apply for the mortgage with a co-borrower and qualify based on combined incomes.
What programs are available for first-time home buyers?
Low income home loans can help first-time home buyers overcome hurdles like low credit or income, smaller down payments, or high levels of debt. A few good programs for first-time home buyers include Freddie Mac’s Home Possible mortgage, Fannie Mae’s HomeReady mortgage, the Conventional 97 mortgage, and government-backed loans like FHA, USDA, and VA. First-time home buyers can also apply for down payment assistance grants through their state or local housing department.
Can the government help me buy a house?
There are a number of ways the government can help you buy a house. Perhaps the most direct way to get help is by applying for down payment assistance. This is a grant or low-interest loan to help you make a down payment. You can also buy a house using a government-backed mortgage, like the FHA or USDA. With these programs, the government essentially insures the loan, so you can buy with a lower income, credit score, or down payment than you could otherwise.
How do I buy a house without proof of income?
You can no longer buy a house without proof of income. You have to prove you can pay the loan back somehow. But there are modern alternatives to stated-income loans. For instance, you can show “proof of income” through bank statements, assets, or retirement accounts instead of W2 tax forms (the traditional method). Many people who want to buy a house without proof of income these days find a bank statement loan to be a good option.
How do you rent to own?
A lease option or rent-to-own home isn’t exactly what it sounds like. You don’t simply rent until the house is paid off. Instead, you usually pay a higher rent for a set period of time. That excess rent then goes toward a down payment when you buy the house at a later date. Rent-to-own might help you buy a house if you don’t have a lot of cash on hand right now or if you need to improve your credit score before applying for a mortgage. However, rent-to-own requires seller cooperation and comes with unique risks.
Can I rent-to-own with no down payment?
Rent-to-own does not mean you can buy a house with no down payment. When you rent-to-own, you’re paying extra rent each month that will go toward your down payment later on. And usually, rent-to-own contracts include an option fee that’s a lot like a down payment. The option fee is smaller. Think 1 percent of the purchase price instead of 3 to 20 percent. And that fee eventually goes toward your purchase. But it’s still a few thousand dollars you must pay upfront to secure the right to buy the home later on.
Can I get a grant to buy a house?
Qualified buyers can get a grant to buy a house. These are called down payment assistance grants. They won’t pay for the whole house, but they can help cover your down payment to make a mortgage more affordable. You’re most likely to qualify for a grant to buy a house if you have a low to moderate income and live in a target area.
What type of low income home loan is the easiest to qualify for?
FHA loans are generally the easiest low income home loan to qualify for. The federal government insures these loans, which means lenders can relax their qualifying rules. It’s possible for a home buyer with a credit score of 500 to get approved for an FHA loan, but most FHA lenders look for scores of 580 or better. And a FICO score of 580 lets you make the FHA’s minimum down payment of 3.5 percent.
How can I get a home loan with low monthly payments?
To get the lowest possible monthly payment, choose a 30-year loan term, find a cheaper home, put more money down, and make sure you have excellent credit before applying for your mortgage. If you can afford a 20 percent down payment, you can avoid PMI premiums, which lower your monthly payments even more. Veterans can get VA loans that require no PMI, regardless of their down payment size.
What’s the lowest amount you can put on a house?
Some home buyers can put no money down with a VA or USDA loan. Conventional loans will require at least 3 percent down, and FHA loans will require at least 3.5 percent down. Down payment assistance grants and loans could help you cover some or all of this down payment.
How much house can I afford if I make $30K a year?
If you make $30,000 a year, you could probably spend about $110,000 on a house, assuming you get a 30-year fixed-rate mortgage at 6 percent. This is a rough estimate. Your unique financial situation may be different. Getting a pre-approval from a lender is the only way to find your actual price range.
What are today’s mortgage rates for low income home loans?
Many low-income mortgage programs have lower interest rates than “standard” mortgage loans. So you might get a great deal.
However, interest rates vary depending on the borrower, the loan program, and the lender.
To find out where you stand, you’ll need to compare loan offers from several lenders and then choose your best deal.
Time to make a move? Let us find the right mortgage for you
“Credit availability declined in December to the lowest level since 2012, as ongoing industry consolidation is resulting in more loan programs being removed from the marketplace,” said Joel Kan, MBA’s vice president and deputy chief economist. Read next: Mortgage rate decline spurs optimism in home purchasing Breaking down the index, the Conventional MCAI decreased by … [Read more…]
As 2023 ended, independent mortgage banks could be forgiven for saying “good riddance.” Last year accelerated a trend of skyrocketing mortgage rates, making it harder for families to buy a home and collapsing the market for refinances.
But there was also reason for optimism heading into 2024. A year-end bond rally brought mortgage rates down from 8% to 7%. And most IMBs have now downsized expenses to fit reduced loan and revenue volumes caused by the collapse of the refi market.
This recap of 2023 is just one of the subjects addressed in the “CHLA 2023 IMB Report,” just released by the Community Home Lenders of America (CHLA). As the only national association that exclusively represents IMBs, CHLA has for almost a decade released this report annually, with a primary goal of educating Congress and federal officials about the critical role IMBs play in ensuring access to mortgage credit for first-time, minority, and other underserved homebuyers.
This year’s report leads off with key takeaways for federal mortgage policy makers. Number one on the list is CHLA’s call for the Federal Reserve (and the GSEs) to buy mortgages, to reduce historically excessive spreads between mortgage rates and 10-year Treasuries — a key to homeownership affordability.
Another takeaway is CHLA’s request for action on our “Consumer Mortgage Bill of Rights.” Consumers should be protected from the abusive practice of trigger leads, where a consumer is bombarded with texts, phone calls, and emails just because they are initiating a mortgage application. Consumers should be served only by mortgage loan originators that are fully licensed and qualified. And quasi-monopolistic pricing should be scrutinized – like FICO credit scores, whose costs have increased by 500% in just 13 months.
Another key takeaway is just how important IMBs have become for the mortgage and home buying process since the 2008 housing crisis. In fact, IMBs now originate 81% of all new mortgages. And IMBs dominate the most critical programs for first-time, minority, and underserved borrowers – originating 90% of FHA and VA loans.
CHLA’s IMB Report cites a myriad of statistics and reports confirming that IMBs outperform banks in lending to minority and underserved borrowers. For example, a 2022 Urban Institute report concluded that “banks substantially underperformed nonbanks in serving borrowers and neighborhoods of color.“
Fortunately, when it comes to mortgage policies that help IMBs and the consumers they serve 2023 was a good year. The year started with an FHA premium cut, and with excessive VA loan fees expiring. The year ended with Fannie and Freddie starting to replace loan repurchase demands, which hurt both lenders and borrowers, with an indemnification option.
Going into 2024, our IMB Report lays out a detailed policy agenda that prioritizes access to mortgage credit to address significant affordability challenges for borrowers facing high mortgage rates.
The final objective of CHLA’s report is to rebut false, but persistent, myths about IMBs. Many people would be surprised to learn that mortgage borrowers have substantially more consumer protections when they get a mortgage loan through an IMB than when they get a mortgage loan through a bank.
Every IMB is subject to supervision from the Consumer Financial Protection Bureau (CFPB) – while 97% of banks are exempt from CFPB supervision. Every mortgage loan originator that works for an IMB is licensed (SAFE Act test, independent background check, and continuing education) – while bank loan originators are exempt from all these requirements.
The other pervasive – but completely false – myth is that IMBs are risky. This canard is pulled out whenever there is a crisis – like COVID or the Silicon Valley Bank demise last March. But these prophesies of doom are always proved wrong, as they ignore the realities of the IMB business model.
As this year’s IMB Report explains, IMBs overwhelmingly originate federal agency mortgage loans, then sell them to diversified investors through securitization or sell them to aggregators. As a result, even if there are mortgage loan losses or declining mortgage asset values, IMBs are very much insulated.
The simple truth is that if an IMB loan originator goes out of business – which some did last year – the only real impact is that the lender is no longer around to originate new loans. And, for IMB mortgage servicers, there is virtually no taxpayer or systemic risk, except for a handful of mega-servicers.