mortgage relief

Apache is functioning normally

QC/Fraud, LO AI, MSR Financing, GNMA Programs; Disaster Updates and Guides – The CFPB is There for Us

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QC/Fraud, LO AI, MSR Financing, GNMA Programs; Disaster Updates and Guides – The CFPB is There for Us

By:
Rob Chrisman

Tue, Sep 5 2023, 10:40 AM

It was a rough weekend. My cat Myrtle, resting comfortably at the top of the food chain, was visibly miffed at me not nominating her (again) for the vaulted “40 under 40” award. I reminded her that she is way over that in cat years, but my explanation fell on her one deaf ear and her one good ear despite me telling her how much line-caught salmon we could buy with the nomination fee. (Hey, don’t get me wrong. I know some of those folks who were nominated or selected, and the industry is better off because of them!) If lenders would like a little good news, they should know that, despite the low interest rates we saw a few years ago, people are still moving, and that’s a source of business. Around 8.6 percent of Americans moved last year, slightly more than the previous year, but still below pre-pandemic levels. Accordingly, WalletHub released its report on 2023’s Best States to Live in. Chalk it up to complete East Coast bias, but Massachusetts, New Jersey, New Hampshire, and New York took the top four spots. Really? (Today’s podcast can be found here and this week’s is sponsored by LoanCare, a Fidelity National Financial (NYSE: FNF) division and award-winning developer of the most sophisticated mortgage servicing portfolio management tool, LoanCare Analytics, built to support MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Flagstar’s Jason Lee on how capital markets departments balance volume and margin.)

Lender and Broker Products, Programs, and Services

Mortgage servicers of all sizes trust their portfolios to MSP®, Black Knight’s loan servicing system. In fact, Fahe (Federation of Appalachian Housing Enterprises), a nonprofit that serves the people and communities of Appalachia, recently signed a contract for MSP. In Black Knight’s recent announcement, Fahe states that top-tier technology will help it realize its mission and better serve its communities. Wondering if the MSP loan servicing system is the right fit for your servicing business? Learn why it’s the one loan servicing system for every mortgage servicer.

NEW: Maxwell’s Mini-Guide to Surviving Today’s Big Housing Market Reset, ft. advice from Maxwell Co-founder & CEO John Paasonen, Rob Chrisman himself, theLender EVP Chris Ledwidge, and more. Is your lending business prepared for a market reset? To thrive, lenders need a fresh game plan driven by home buyer trends, creative lead generation, and insightful data. Maxwell put this guide together to help you refresh your thinking for the market ahead. In it, you’ll learn ways to rebuild your pipeline, the borrower segments that are still rising in the housing market, and how to better leverage data to make confident business decisions. Lenders: The next five years likely won’t be anything like the last five. Now is the time to rethink your business. Click here to download your free copy of Maxwell’s Mini-Guide to Surviving Today’s Big Housing Market Reset.

Profitable Mortgage Companies are focused on the long-term value of the customer relationship. Essex Mortgage’s partners enjoy greater customer retention, GNMA pass-thru pricing, no overlays, no LLPA’s, NO EPOs and NO EPDs, as well as Tax Deferred asset growth and a long-term cash flow stream without having to be a GNMA issuer themselves. Please contact us to discuss how the Essex GNMA Excess MSR program can help retain and enhance your customer relationship, broaden guidelines, and expand into new markets. Please contact Kimberly Schenck.

“Your business can benefit from powerful national banking resources that incorporate personalized, one-on-one relationships with industry experts. Western Alliance Bank delivers stable, trusted treasury management and fraud protection services from cash management to financing to account security. These tools can help you keep operations running smoothly, conveniently manage custodial and payroll accounts, and originate streamlined online wire transfers. Our Specialized Mortgage Services team tailors mortgage finance products to your needs, including warehouse lending, MSR financing, note financing and corporate credit card services that offer speed to approval and certainty of execution. Discover how competitive rates, efficient cash flow cycles and a streamlined banking relationship can help you achieve your goals. Contact Mark Short (469) 702-6212, Nick Richards (646) 708-1211, Nicole Avey (720) 633-4759, Elizabeth Mix (480) 329-2122, Jim Karr (626) 390-8534 or Chris Martin (480) 341-5483. Western Alliance Bank, Member FDIC.”

Ready to mend your relationship with your loan origination system? Join the TRUE team on September 20th and hear directly from TruStone and V.I.P Mortgage on how they’re applying AI technology to solve the challenges related to their LOS platforms. The roundtable discussion will unpack the frustrations related to most of today’s more popular LOS platforms, the crucial importance of well-organized borrower data, and how applying AI at specific points in the document journey can dramatically change the way LOS platforms perform. Sign up today.

Capacity is heading to The Mortgage Collaborative’s “Music in My Ears Conference” in Nashville, TN, next week! CEO David Karandish will speak on Monday, September 11th, at 3:15 p.m. about our latest offerings: generative AI-powered Guideline Search and tailored AI Assessments. Get game-changing, personalized insights on successfully implementing AI and automation in your business! Be sure to stop by our session in Nashville or book one-on-one time with our team here. The mortgage industry desperately needs a platform that securely integrates with lenders’ key systems, providing loan officers with instant, actionable answers about borrower opportunities, loan statuses, guidelines, and more. Capacity reduces the time LOs spend logging into a sea of endless systems to find information. If this sounds familiar, why not find out how Capacity can save your team time and frustration? See how it works.

“TENA Companies, Inc. is your strategic mortgage Quality Control partner in the fight against fraud. Develop your strategy against evolving mortgage market fraud with help from our proficient and highly trained auditors. Fraud involving income and employment schemes, as well as occupancy-related deception, continue to impact risk levels for all lenders. As highlighted in Fannie Mae’s July 2023 Quality Insider: Reviewing your fraud controls in QC, a robust Quality Control plan is an integral component for identifying patterns that can be indicative of fraud. These insights enable lenders to proactively implement processes for fraud prevention. Safeguard your operations, ensure risk mitigation, and strengthen your Quality Control by partnering with TENA. Contact us today!”

Disaster News and Updates

Last year, U.S. disaster damage totaled $171.5B. Destructive weather and climate events, or bad forestation or building practices, factor into the mix of hurricanes, wildfires, tornados, and drought. Few are forecasting them to decrease or affect a smaller geographic range. Is your lending operation ready? What are you telling your borrowers about insurance? Major insurers say they will cut out damage caused by hurricanes, wind, and hail, not to mention along coastlines and in wildfire prone areas, suggesting that companies will just insure for liability and fire. So if that is the case, will insurance rates fall? Of course not. But where does all of this leave the mortgage servicers?

When disasters strike, lenders often postpone loan closings, impacting origination revenue and impairing the ability to fund new loans. Loans that have already been funded may be difficult to sell, further limiting liquidity. Black Knight has a piece worth skimming, or more, about how you can reduce your financial exposure, decrease costs, and better serve borrowers by preparing before, during and after a disaster. Download a complimentary ebook: Climate-Change and Weather-Related Disasters: How to Manage Mortgage Risk.

Nearly every part of the United States faces natural disasters, whether they be earthquakes, hurricanes, tornadoes, forest fires, drought, or volcanoes. A declaration by FEMA triggers lender and servicer policies and procedures.

Mortgage Quality Management & Research (MQMR) sent out Fannie Mae Disaster Relief – FAQ. Check out more equally insightful FAQs. (To learn more about Mortgage Quality Management & Research, download MQMR’s white paper.)

Recently we’ve had Florida Hurricane Idalia FEMA-4734-DR, Illinois Severe Storms and Flooding DR-4728-IL, Mississippi DR-4727, and Vermont DR-4720: Update to End Date of Occurrence.

Florida, Georgia, and the Carolinas were hit by Hurricane Idalia, causing damage from storm surge, flooding, and high winds. Recovering from a catastrophic event like this one can feel overwhelming. It’s not always easy to know where to turn for help and what steps to take. The CFPB put together a guide to handling finances that you can share with the people you serve, to help them manage the money decisions they face. View CFPB’s disasters and emergencies guide providing resources to help recovery, including how to tackle housing issues, protect finances, deal with property damage, manage bills, and ask financial companies for help.

Freddie Mac issued a reminder to homeowners and mortgage servicers of its relief options for those affected by Hurricane Idalia. Freddie Mac’s forbearance program provides homeowners mortgage relief for up to 12 months without incurring late fees or penalties. Freddie Mac’s disaster relief options are available to homeowners who have been impacted by an eligible disaster. This includes anytime the homeowner’s property experiences an insurable loss, and also covers instances where their homes or places of employment are located in Presidentially Declared Major Disaster Areas where federal Individual-Assistance programs are made available to affected individuals and households. Foreclosure and other legal proceedings are also suspended while homeowners are on a forbearance plan. More information is available on My Home by Freddie Mac where owners can read about the steps they can take to help recover from a natural disaster, including frequently asked questions related to disaster and mortgage relief.

Fannie Mae reminded homeowners and renters impacted by natural disasters, including Hurricane Idalia, of available mortgage assistance and disaster relief options. Mortgage servicers are also reminded of options to assist homeowners under Fannie Mae’s guidelines.

Under Fannie Mae’s guidelines for single-family mortgages impacted by a natural disaster:

Homeowners and renters looking for disaster recovery resources may visit FannieMae.com to learn more about addressing immediate needs. Fannie Mae also offers help navigating the broader financial effects of a disaster to homeowners and renters through disaster recovery counseling at 855-HERE2HELP (855-437-3243).

PHH Correspondent posted information regarding Illinois DR-4728: New Disaster Declared, Mississippi DR-4727, and Vermont DR-4720. Go to the PHH company library to view the announcement and for all disaster declared counties, requirements, procedures, and conditions.

On 9/1/2023, with Amendment No. 1 to DR-4734, FEMA declared federal disaster aid with individual assistance has been made available to 6 additional Florida counties affected by Hurricane Idalia from 8/27/2023 and continuing. See the attached announcement for inspection requirements. AmeriHome Mortgage 20230901-CL Disaster Announcement.

Capital Markets

It’s looking more and more like a goldilocks scenario for the Federal Reserve. Last week was crammed with key economic data on the labor market and inflation which will probably be instrumental in shaping the decision of the Fed’s monetary policy committee at its meeting later this month. Many of the indicators pointed towards cooling in the economy, strengthening hopes that it would be enough for the central bank to keep rates steady. Friday’s nonfarm payrolls report showed an uptick in the unemployment rate. Market participants took heart from the data, which suggests that the highly resilient labor market is finally cracking and that the effects of the Fed’s aggressive tightening campaign are showing up.

More specifically, we learned at the close of last week that U.S. unemployment rose to 3.8 percent in August, a significant increase from July’s rate of 3.5 percent and the highest percentage since February 2022, as the economy continued to lose momentum built up after pandemic lockdowns. Non-Farm Payrolls barely beat consensus (expected +170k, actual +187k) and previous prints were revised lower (June was cut from +209k to +105k). More people entered the workforce, increasing the size of the labor force by 736k, which will help bring supply and demand more into balance.

Keep in mind that increased hiring and slowing wage growth are key ingredients of the Fed’s fight against pandemic-era inflation, and the overall report was good news for the bond market, as it shows the Fed’s tightening is gaining traction in the labor market. In theory, this will take some of the pressure off the Fed to keep hiking rates and give the central bank some confidence to let previously enacted hikes work their way through the economy. The next Fed meeting is only two weeks away.

Though we’ve already received the latest rate decision from Royal Bank of Australia this morning, where rates were held steady at 4.10 percent, today is light on economic data. After this commentary goes out, markets will receive August employment trends and July factory orders. Highlights from the remainder of the week include September’s Fed Beige Book tomorrow and July Wholesale Inventories on Friday. We begin the trading week with Agency MBS prices worse .125-.250 and the 10-year yielding 4.22 after closing last week at 4.17 percent on no real news.

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

Source: mortgagenewsdaily.com

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It took a lot longer than expected, but California homeowners who received mortgage debt relief last year won’t be on the hook for state taxes tied to so-called phantom income.

California Assembly Bill 1393, introduced by Assembly member Henry T. Perea (D-Fresno), extends tax relief on the forgiveness of mortgage debt by conforming California law to federal law.

The California State Senate approved the bill on June 30th, passing it with an overwhelming 33-0 vote, which was later followed by a 68-0 vote by the Assembly last Thursday.

Thanks to this bill, which should be signed into law by Governor Jerry Brown shortly, California homeowners who had certain debt canceled or forgiven last year will be able to amend their taxes and get refunds.

New Bill Will Provide State Relief to Align with Existing Federal Law

Early last year, the Mortgage Forgiveness Debt Relief Act of 2007 was given a one-year extension, meaning those who were foreclosed on or sold short didn’t have to worry about federal taxes on gains they never actually realized.

Typically, mortgage debt that is forgiven by a bank or lender must be included as ordinary income on your tax return, but the Mortgage Forgiveness Debt Relief Act allows borrowers to exclude certain canceled debt tied to a principal residence.

Additionally, debt reduced through mortgage restructuring such as a loan modification (principal reduction) also qualifies for tax relief.

But while federal taxes may have been avoided last year, some California homeowners were still subjected to state taxes in certain cases.

It’s unclear how many homeowners actually got taxed thanks to anti-deficiency laws already in place that protected many of those who sold their homes for less than what they were worth, but the state estimates taxpayers will save roughly $39 million, per the Sacramento Bee.

The bill also protects homeowners from penalties regardless of whether they reported the discharged debt on their 2013 tax return.

Unfortunately, this bill will only cover transactions that occurred in 2013, meaning uncertainty still looms for mortgage debt forgiven this year. Another extension will likely be necessary…

The same goes for federal tax relief, which also hangs in the balance as politicians work on a tax extenders package.

Of course, much of the mortgage relief has already been doled out, with short sales, foreclosures, and loan mods all dropping in numbers considerably as home prices continue to rise.

Still, the passage of this bill should give homeowners a lot more confidence to move forward with such an action without fear of being on the hook for state taxes.

However, even if the discharged debt isn’t taxable, a taxpayer may still have to deal with taxes if there was a gain from the sale or foreclosure of the property.

As always, be sure to consult with a lawyer, CPA, and/or tax preparer to ensure you understand the implications of this bill and other related laws.  It’s certainly complicated, so enlisting a professional is probably not a bad idea.

Source: thetruthaboutmortgage.com

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There’s been a lot of news coverage lately concerning veterans not receiving proper medical care. Sadly, that’s just one area where our military isn’t being treated appropriately.

Whether active duty military realize it or not, they’re also entitled to special mortgage rates and fees thanks to the Servicemembers Civil Relief Act of 2003 (SCRA).

But many do not recognize this fact, and lenders haven’t been very forthcoming about notifying them of these financial protections afforded under that law.

As a result, President Obama has announced a new voluntary partnership with banks and lenders to help spread the word about these important rights to the military community so they have every opportunity to pursue the American Dream.

So far, Bank of America, Citi, Quicken Loans, Wells Fargo, and Ocwen Loan Servicing have partnered up with the White House to make it easier for the military to take advantage of benefits they might not be aware of.

Here’s the plan of attack:

– Lenders will proactively identify active duty service members no less than once per quarter by querying the Defense Manpower Data Center (DMDC) against their loan portfolio

– They will contact service members that are eligible for mortgage benefits via phone, mail, and e-mail outreach

– And simplify the application process to ease the burden of enrollment and satisfaction of the SCRA written notice requirement

In simple terms, these participating lenders will actively search through their customer database to determine who is eligible for mortgage relief, instead of requiring active military to contact the bank themselves.

When it comes down to it, active military have other things to worry about, and dealing with cumbersome paperwork is probably the last thing they have time to do.

Active Military Are Entitled to 6% Mortgage Rates

The SCRA affords certain benefits to members of the U.S. Army, Navy, Air Force, Marine Corps, and Coast Guard.

One of those key provisions is a maximum interest rate on mortgage loans, which is set at six percent.

However, the creditor only has to lower the service member’s rate after receiving a written request and a copy of their military orders. As we all know, getting this paperwork to the lender can be fraught with problems.

So ideally this partnership will make it a lot easier for the military to get lower mortgage rates, despite this coming at a time when fixed-rate mortgages have rates much closer to 4%.

For the record, the SCRA definition of “interest” includes service and renewal charges or any other fees or charges, less bona fide insurance.

The law requires that banks maintain the interest rate reduction for the period of military service and one year after it comes to an end.

Interest charged in excess of six percent must be refunded to the service member or applied to future mortgage payments, and it can be applied retroactively.

There is a caveat. If a court determines that a borrower’s ability to pay a higher rate of interest isn’t affected by his or her military service, the bank may be granted relief from the rule.

The SCRA also affords some protections that make it more difficult to foreclose on a borrower during active military duty or evict a service member.

If you’re an active duty homeowner, or plan to be, you may want to reach out to your lender to see if you’re eligible for relief, especially if your mortgage rate exceeds six percent.

Read more: What is a VA loan?

Source: thetruthaboutmortgage.com

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The California Mortgage Relief program is expanding its reach again, hoping to aid more homeowners who fell behind on their payments during the pandemic.

Program officials announced Tuesday that aid would be extended to three new groups: homeowners whose mortgages had a “partial claim” or deferral, those who missed a second mortgage payment after June 2022, and those with a primary residence that includes up to four units. It also offered more aid to homeowners who had previously received help from the state.

One reason for the expansion is that the state has yet to spend most of the $1 billion in homeowner aid the federal government provided through the American Rescue Plan last year. Thus far, about 10,500 households — more than half of them earning only 30% of their county’s median income — have received an average of $28,137 from the program, for a total of just under $300 million.

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“Many California homeowners are still recovering from the financial hardships of the pandemic,” Business, Consumer Services and Housing Agency Secretary Lourdes Castro Ramírez said in a statement. “This program expansion will enable the state to assist even more homeowners who fell behind on their mortgage payments. Our primary goal is to keep families in their homes, prevent foreclosures, and assist homeowners on a stable path to financial recovery.”

Tiena Johnson Hall, executive director of the California Housing Finance Agency, said the agency talked to borrowers and loan servicers to figure out how to evolve the program. “This expansion represents months of careful consideration and creative solutions that make sure the most in need get help,” Johnson Hall said.

Volma Volcy, founder and executive director of the nonprofit advocacy group Ring of Democracy, said the most difficult thing has been getting eligible borrowers to take the state’s offer seriously. “They tend not to believe it because it sounds too good to be true. … This time it’s true,” Volcy said.

“I am imploring you: Come get the help, because it works,” he added.

Under federal law, households earning up to 150% of the median income in their county who suffer a pandemic-related financial hardship are eligible for up to $80,000 for past-due mortgage payments and up to $20,000 for missed property tax payments. According to the federal Department of Housing and Urban Development, 150% of the median income in L.A. County last year was $125,100 for a single individual and $178,650 for a family of four.

A few caveats: If you’ve already paid off your mortgage or tax debt, you can’t recoup that money by applying for state aid. Nor are you eligible for mortgage aid if your mortgage is a “jumbo” loan bigger than the limits set by Fannie Mae and Freddie Mac. Finally, you can’t obtain the state’s help if you have more than enough cash and assets (other than retirement savings) to cover your mortgage or tax debt yourself.

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Here’s a breakdown on the new targets for mortgage assistance.

Partial claim second mortgages and deferrals. Partial claims are a technique to help people at risk of losing their homes after missing several monthly payments on a loan backed by the Federal Housing Administration, the U.S. Department of Agriculture or the Department of Veterans Affairs. Rather than demanding larger payments to cover the past-due amount, the agencies encouraged lenders to split off the past-due portion into a second, interest-free mortgage. That way, a borrower could stay current by paying just their usual monthly payment.

The partial claim second mortgage could be ignored until the house was sold, the mortgage was refinanced or the first mortgage was paid off, at which point the partial claim would have to be paid in full. In the meantime, it’s a real debt that affects the borrower’s ability to obtain credit.

Similarly, some lenders offered deferrals that bundled the missed payments into a sum that was tacked on to the end of the loan. Borrowers wouldn’t face higher monthly payments, but they would have to pay off the deferred amount (a “balloon payment”) when they refinanced, sold their house or reached the end of their loan.

The state mortgage relief program is now offering up to $80,000 to pay all or part of a COVID-related partial claim or deferral.

“Using relief funds to pay down deferred balances for homeowners who experienced COVID hardships restores home equity and puts financially vulnerable families in a stronger position to sustain homeownership,” Lisa Sitkin, senior staff attorney at the National Housing Law Project, said in a statement. “It also alleviates the anxiety of having to figure out how to pay off a large balloon payment in the future.”

More homeowners who fell behind in 2022. Previously, homeowners had to have missed at least two mortgage payments by June 30, 2022, or one property tax payment by May 31, 2022, to be eligible for mortgage or tax relief, respectively. Now, you’ll qualify if you miss at least two mortgage payments or one property tax payment before March 1, 2023.

Homeowners who need a second shot of relief. The mortgage relief program was originally seen as one-time-only assistance. Now, however, California homeowners who’ve already received help can apply for more if they have missed more payments and remain eligible. No household may collect more than $80,000 over the course of the program.

Owners of multiple-unit dwellings. Initially, mortgage relief was available only to people who owned and occupied a single-family home, condominium or non-mobile manufactured home in California. Now, aid will be available to people whose primary residence includes up to four units, such as a duplex, quadplex or a house with an accessory dwelling unit.

The program continues to offer aid to one additional group: homeowners with reverse mortgages who have fallen behind on their property tax or insurance payments.

How do you apply?

Applications are available only online at camortgagerelief.org. For help filling one out, you can call the program’s contact center at (888) 840-2594, where assistance is available in English and Spanish.

If you don’t have access to the internet or a computer, you can ask a housing counselor to assist you. For help finding a counselor certified by the federal Department of Housing and Urban Development, call (800) 569-4287. You may also get help from the company servicing your mortgage.

The online application process starts with questions to determine your eligibility. If you meet the state’s criteria, you can then complete an application for funds. Here’s where you will need some paperwork to establish how much you earn and how much you owe.

According to the program’s website, among the documents you will need to provide are a mortgage statement, bank statements, utility bills and records that show the income earned by every adult in your household, such as pay stubs, tax returns or a statement of unemployment benefits. If you don’t have access to a digital scanner, you can take pictures of your documents with your phone and upload the images.

The site provides links to the application in English, Spanish, Chinese, Korean, Vietnamese and Tagalog.

When will the program end?

The state will continue to offer help to homeowners who became delinquent because of COVID-related issues until it has spent all $1 billion from the federal government. The state estimates that an additional 10,000 to 20,000 homeowners will be helped by the remaining funds.

The money will be awarded on a first-come, first-served basis, with one important exception: 40% of the aid must go to “socially disadvantaged homeowners.” Those are residents of the neighborhoods most at risk of foreclosure, based on the Owner Vulnerability Index developed by UCLA’s Center for Neighborhood Knowledge.

About The Times Utility Journalism Team

This article is from The Times’ Utility Journalism Team. Our mission is to be essential to the lives of Southern Californians by publishing information that solves problems, answers questions and helps with decision making. We serve audiences in and around Los Angeles — including current Times subscribers and diverse communities that haven’t historically had their needs met by our coverage.

How can we be useful to you and your community? Email utility (at) latimes.com or one of our journalists: Matt Ballinger, Jon Healey, Ada Tseng, Jessica Roy and Karen Garcia.

Source: latimes.com

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The Homeowners Assistance Fund (HAF) — a program designed to offer financial help to homeowners impacted by the COVID-19 pandemic — has kept more than 300,000 homeowners in their homes by curing defaults and keeping them out of foreclosure, according to data released this week by the U.S. Department of the Treasury.

“As of March 31, HAF programs made roughly $3.7 billion in payments to more than 318,000 homeowners at risk of foreclosure,” the Treasury Department said in an announcement. “In the first quarter of 2023 alone, HAF programs distributed $1.2 billion in assistance to households – a 50% increase over the fourth quarter of 2022 – demonstrating the program is continuing to scale rapidly as designed.”

The data also shows that 14 states and two U.S. territories have expended over 50% of their HAF funds, excluding administrative expenses. In addition, the funding has reached a greater number of economically vulnerable people than it did prior to the federal mortgage relief efforts.

“As of March 2023, 49% of HAF assistance was delivered to very low-income homeowners, defined as homeowners earning less than 50% of the area median income,” the Treasury said. “Demographically, 35% of homeowners assisted self-identified as Black, 23% self-identified as Hispanic/Latino, and 59% self-identified as female.”

The Treasury Department is committed to ensuring that the remainder of the funds will be distributed, according to Wally Adeyemo, deputy secretary of the Treasury.

“The Homeowner Assistance Fund has helped keep hundreds of thousands of families in their homes,” Adeyemo said. “As state programs assess their remaining HAF funds, the Treasury Department will continue working with recipients to ensure these funds are swiftly delivered to homeowners most in need.”

Passed as part of the American Rescue Plan Act in early 2021, the HAF program is designed to help homeowners who have been financially impacted by COVID-19 pay their mortgage or other home expenses. A $10 billion allocation was made for the program, but mortgage servicers previously stated that spreading awareness about the program has been a challenge.

The program is also available for reverse mortgage borrowers. A requirement of a government-sponsored Home Equity Conversion Mortgage (HECM) is that the homeowner keep their home in good repair while paying any applicable property taxes, homeowners insurance and homeowners association (HOA) fees.

Reverse mortgage borrowers who may have fallen behind on such payments are eligible to receive HAF funds to help cover the expenses and keep them out of foreclosure.

Source: housingwire.com

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Apache is functioning normally

California housing officials are urging households to take advantage of Homeowner Assistance Fund resources following recent changes to eligibility, including updated area median-income levels. 

The new income thresholds will qualify more mortgage borrowers for up to $80,000 in financial assistance. Funding was originally made available in late 2021 under provisions of the American Rescue Plan Act in order to help households encountering economic distress due to economic impacts of COVID-19. 

“Even now, too many homeowners are still struggling to recover from the financial toll of the pandemic. This adjustment could mean that more families will not only save their house, but their home,” said Rebecca Franklin, president of the CalHFA Homeowner Relief Corporation, in a press release.

The Golden State’s Homeowner Assistance Fund already expanded in February this year to make relief available to more borrowers, including reverse mortgage holders. It also opened up to support households who may have already received some form of pandemic-related loss mitigation, such as a partial-claim second mortgage or loan deferral if granted in or after January 2020.

Homeowners can qualify for federal relief if combined income comes in at or below 150% of their area’s median levels, as determined by the U.S. Department of Housing and Urban Development. Qualifying thresholds rose across most California counties from 2022 to 2023, and range from $99,000 to $223,000 for a household with two residents age 18 or older. But eligible income decreased in a few of California’s wealthier markets, including San Francisco and adjacent counties, where the amount shrank from to $223,000 from $223,700. 

Los Angeles County saw the eligible-income total increase to $151,350 from $142,950. Meanwhile, the limit in Santa Clara County, which includes San Jose, also grew to $214,100 from $202,200. 

Qualifying limits were also published for households of other sizes, with the range for single homeowners running from $96,200 to $195,100. For households with three adult residents, the upper threshold is now between $111,400 and $250,850. 

Eligible homeowners may apply for funding online to catch up on late or missed mortgage and property tax payments, or to help pay partial-claim or deferred amounts. Struggling homeowners with reverse mortgages may also apply it to their insurance costs.

Focus on state HAF programs is currently growing as regulators underscore to the lending industry its responsibility to provide means available to help homeowners avoid foreclosure. Some states with remaining funds, which the Department of the Treasury meted out beginning in 2021, have amended their original terms to increase uptake of the programs and protect more borrowers. 

Among those changes are extensions of original application deadlines and the addition of reverse liens to the pool of eligible loans. Earlier this month, Hawaii doubled the maximum amount available through its program and stated it could provide assistance for utility payments and selected other charges even to households without an existing home loan.

The Biden Administration made almost $10 billion in Homeowner Assistance Fund aid available nationwide through the American Rescue Plan Act, with $750 million granted to California. Each state took responsibility for their program’s administration, regulations and fund disbursement. CalHFA estimates it will allocate all of its funds by September 2025.

The range of different policies and campaigns are resulting in varied outcomes across the country. While a handful of states have already closed their programs, the majority remain open to new applicants. But some states, such as Pennsylvania, encountered problems with vendors used, leading the Keystone State to put some of its efforts on hold. 

Source: nationalmortgagenews.com

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Left to right: Leonela Felix, Dawn Euer

Rhode Island enacted a new law this week to make permanent a requirement that servicers provide sufficient mediation and loss mitigation efforts before proceeding to foreclosure.

The Foreclosure Mediation Act mandates lenders to advise delinquent mortgage borrowers of options available to them that could prevent loss of their properties. If a vulnerable homeowner requests mediation, the lender will be obligated to make good-faith efforts on providing a pathway toward making the loan current and may not initiate foreclosure proceedings until a coordinator affirms it has complied. 

Mediation coordinators must come from Department of Housing and Urban Development-approved counseling agencies in the state and have “no authority to impose a solution.” They must meet certain other requirements requirements related to having sufficient mortgage industry knowledge, including at least three years of experience with loss mitigation guidelines

The act codifies temporary legislation the Ocean State introduced 10 years ago that was due to expire on July 1. The 2013 Foreclosure Mediation Act was originally slated to end in 2018, but given a five-year extension.

Introduced in February this year and sponsored by Sen. Dawn Euer and Rep. Leonela Felix, the legislation passed in both Rhode Island House and Senate chambers earlier this month. Gov. Daniel McKee signed the act into law on Wednesday.

“I know how devastating foreclosures can be for families and communities firsthand,” said Felix, whose family lost their home when she was a child, in a press release. “If we had had this program back then, we could have gotten on a payment plan we could afford and stayed in our home. This program has given other families security we didn’t have.”

According to RIHousing, more than 1,500 homeowners have taken part in mediation conferences since 2013. Approximately 46% of the efforts completed resulted in the borrower retaining possession of the home through loan modification, reinstatement or a revised repayment plan.  

“To a lender, a mortgage might just be a line on a spreadsheet. But to a homeowner, it’s so much more than that,” Euer said. “These additional protections help people get back on their feet, stay in their homes and keep paying their bills.”

Meanwhile, officials in neighboring Massachusetts introduced similar foreclosure-prevention legislation last month.

The new state proposals come as government agencies attempt to come up with successor plans to some of the mortgage relief measures introduced during the COVID-19 pandemic. With foreclosure moratoria and forbearance offered at the federal level either already expired or sunsetting, pressure has come from the likes of the Consumer Financial Protection Bureau to ensure mortgage companies remain attentive to requirements to provide other types of new or existing assistance to distressed borrowers.

Earlier this year, the Federal Housing Administration agreed to extend pandemic loss-mitigation options to a broader range of struggling mortgage holders, while the Department of Veterans Affairs will unveil a new program in July that adds a loss-mitigation step before struggling borrowers reach the foreclosure stage. 

Another sign of the priority the federal government is assigning to foreclosure prevention came in a new Department of Housing and Urban Development report this week. The agency alleged Mr. Cooper, the country’s largest nonbank servicer, failed to provide adequate home retention options to more than 80% of delinquent borrowers with FHA-insured loans after their COVID forbearance plans ended.

Last month, new foreclosure starts nationwide increased by 4% on a year-over-year basis and 5% from April, according to real estate data and analytics provider Attom. The number of distressed properties turned into completed repossessions took its biggest jump this year to 4,020 homes, 41% higher than in May 2022. 

Source: nationalmortgagenews.com

Apache is functioning normally

Continued Omicron pressure, disaster relief options in select states, and more. Even the relatively steady weeks in our industry are still worth writing about – read on for the latest!

Rates Update

Last week, mortgage rates started low and rose slightly following an announcement from the Fed regarding tapering – the rate at which it reduces its monthly asset purchases. In short, the Fed will be doubling its pace of tapering because of stronger economic activity and higher inflation (which in turn causes higher rates). The resultant rate increase was small as reflected in Freddie Mac’s PMMS and won’t pose much of a threat to the average buyer, so it’s still a good time to lock in a rate. Contact your Total Mortgage loan officer for more info.

One variable that continues to apply downward pressure on mortgage rates is the Omicron variant of COVID-19. We’ve written about this before, but it’s important to reiterate that rate growth correlates with our recovery from the pandemic. If Omicron’s effects are significant enough, we may see a slowdown or even a decrease in mortgage rates as we begin the New Year. But for now, we’ll continue to monitor the situation and keep you updated with the latest rate changes as we see them.

Disaster Relief Options for Tornado Victims

Fannie Mae and Freddie Mac are offering disaster relief services to those affected by the recent tornado in Kentucky, Tennessee, and Illinois. Borrowers within declared disaster areas can take advantage of up to 12 months of forbearance from mortgage payments; and with no late fees or penalties, it’s a great mortgage relief option to aid in the financial aspect of the recovery process.

Our Total Mortgage loan officers are licensed from coast to coast and are ready to help. If you or someone you know was affected by the storm earlier this month, contact us for more information.

Still Important – Loan Limit Increases in 2022

In case you missed it, the Federal Housing Finance Agency (FHFA) and Federal Housing Administration (FHA) made big announcements regarding their borrowing limits for 2022. The result: more bang for your buck to help compete with rising market prices. With loan limit increases for both conventional and FHA options, these upcoming changes will benefit a wide range of borrowers and create more flexibility in the market. The start of the New Year will be a great time to lock in a new rate, so be sure to contact your Total Mortgage loan officer now to get the ball rolling.

For now, review the updated loan limits in detail below.

In Closing

Mortgage rates continue to slowly climb but are fighting Omicron concerns at every turn. And with the holidays just around the corner, the rest of December may see little news from our industry. Still, with rates remaining low and upcoming loan limit increases, now is a great time to consider homeownership. Don’t hesitate to contact us!

As always, we’ll continue to keep you posted – enjoy the rest of your week!

Source: totalmortgage.com

Apache is functioning normally

While it’s hard to compare the current possible housing crisis to the very real one experienced about a decade ago, there are fears of negative market impact due to COVID-19.

We’ve already seen listing prices fall, along with a big jump in delistings, where home sellers pull their properties off the market.

And home purchase mortgage applications continue to plummet, especially in large metros like LA, NY, and Seattle, per the MBA.

Meanwhile, real estate brokerage Redfin revealed via an SEC filing that it was laying off 7% of its workforce, which could result in roughly 236 job losses.

Then we have Wells Fargo curtailing its mortgage menu, and ARMs pricing higher than fixed-rate mortgages.

The number of mortgages in forbearance has also surged 1000%, and is likely to get a lot worse the longer this goes on.

The real estate and mortgage industry certainly isn’t operating as usual, and it’s even reminiscent of times back in the early 2000s.

Temporary Inability to Pay the Mortgage?

  • The housing crisis a decade ago was driven by shoddy financing
  • Such as stated income, option ARMs, interest-only loans, and so on
  • This potential crisis is being driven mostly just by loss of income due to COVID-19
  • As long as it’s temporary it shouldn’t create too many problems for the housing market

This time around, the number one issue is inability to make mortgage payments due to loss of income or unemployment as a result of coronavirus.

Either companies have laid off staff due to a loss of business, or small business owners have taken a hit because they’ve had to close up shop.

Others might just be experiencing a temporary loss of income or a pay cut while companies navigate the uncertain waters ahead.

Whatever the situation, the problem seems to center around capacity to pay, as opposed to being overleveraged, or holding a home loan with some creative financing terms like interest only or an exploding ARM.

Homeowners could mostly afford their monthly mortgage payments before this unforeseen event took place, unlike the crisis that took place in the early 2000s.

Back then, borrowers took out mortgages they couldn’t afford, and serially refinanced them as their inflated home values grew.

Today, many homeowners have a sizable equity cushion, partially because cash out refinance volume has been very low, and also because home prices have risen a ton over the past decade.

This puts them in a much better position than those homeowners from 2006 who purchased a property with zero down financing and stated their income on the application.

That’s the good news. The bad news is many housing markets were already vulnerable before COVID-19 hit, and thus could see some an uptick in foreclosures if this plays out for a long period of time.

Almost Half of the 50 Most Vulnerable Counties Are in Florida and New Jersey

  • 14 of the highest risk counties can be found in New Jersey
  • Several are also located in the NYC suburban area
  • Another 10 are in Florida, mostly in the central and north part of the state
  • Others are scattered along the Mideast coast

So where are the potential foreclosure hotspots, once any coronavirus-related moratoria disappear?

Well, a new “Special Coronavirus Market Impact Report” released by ATTOM Data Solutions found that half of the most vulnerable counties reside in Florida and New Jersey.

They rank market risk by looking at three main factors:

– Percentage of housing units receiving a foreclosure notice in Q4 2019
– Percentage of homes underwater (LTV 100 or greater) in Q4 2019
– Percentage of local wages required to pay for major homeownership expenses

As we know from the prior mortgage crisis, payment default was driven by homeowner equity to some degree, with underwater borrowers often throwing in the towel because they had nothing to lose.

This was further exacerbated if they didn’t have the money to make mortgage payments, or if they were simply overextended.

Finally, if a foreclosure notice was already received before the coronavirus pandemic took place, it’s clearly a bad sign for a situation that likely just got worse.

As for which counties are on alert, there are 14 in New Jersey, such as Camden and Ocean, along with five in the New York City suburban area: Bergen, Essex, Passaic, Middlesex, and Union counties.

And there are 10 counties in Florida, mostly in the northern and central portions of the state, including Clay, Flagler, Hernando, Lake, and Osceola counties.

Additional New York counties include Orange, Rensselaer, Rockland, and Ulster.

There are also a handful of counties in the top 50 in Delaware, Louisiana, Maryland, North Carolina, South Carolina, and Virginia.

Only Seven Risky Housing Markets in the Midwest and West

  • The housing markets in the Midwest and West appear to be stronger overall
  • The only high-risk markets are in Illinois, mostly the Chicago metro
  • Along with Shasta County, CA, which is just south of Oregon
  • And Navajo County, AZ, in the northeast part of the state

Things appear to be a lot better in the Midwest and West, with just seven counties total landing in the top-50 most vulnerable list.

Every single Midwestern county can be found in Illinois, including Kane, Lake, McHenry, Tazewell, and Will.

Most are in the Chicago metropolitan area, a region that has never really seen massive amounts of home price appreciation since the crisis.

In terms of the West, only two counties made the top-50, including Shasta County, CA and Navajo County, AZ. Both aren’t major metros.

The report also revealed that counties where median home prices range from $160,000 to $300,000 account for 36 of the most vulnerable counties.

Meanwhile, counties with median home prices below $160,000 or above $300,000 made up just 14.

This is because those with median prices below $160,000 are among the most affordable, while those priced above $300,000 have some of the highest home equity amounts, and thus the lowest foreclosure rates.

The takeaway here is that most of the country looks pretty good overall with regard to housing market risk.

That could change depending on how long things play out, but there are plenty of mortgage relief programs available, including a 6-12 month forbearance via the CARES Act.

As long as this is somewhat temporary, and most homeowners get back to work, it should be a momentary blip.

Read more: How does mortgage forbearance work?

Source: thetruthaboutmortgage.com