Gulf Coast Associates' Blog: Mortgage Information

Today, the Bush administration and the Lending Industry announced their plan for helping homeowners who are facing higher mortgage payments when their upcoming subprime ARM loans reset. Faced with the prospect of 2 million subprime mortgages scheduled to reset at higher interest rates in the coming years, the agreement will freeze the loans' current interest rate for the next five years. The administration stressed that the deal is not a bailout because no government money is involved and limits will be put in place as to exactly what type of borrowers will be eligible for the program.

By adopting such limits, only those borrowers who are current on their payments and can't afford the higher reset interest rates will qualify. Borrowers who have been …

Treasury Secretary Henry Paulson announced on Monday there could soon be an agreement between the government and the major players in the mortgage industry to help thousands of American homeowners avoid mortgage defaults by temporarily freezing borrower’s lower introductory rates to keep them from resetting to higher levels for a period of years.

Paulson was addressing a national housing conference and said in his speech that this effort was a “pragmatic response” to the current realities of the worst housing slump in more than two decades. He also noted that the number of homeowners unable to meet their higher monthly mortgage payments because of their rates resetting is currently soaring and will continue to do so unless something is done to help…

The Office of Federal Housing Enterprise Oversight (OFHEO) announced today that the maximum 2008 Conforming loan limit for single-family mortgages purchased by Fannie Mae and Freddie Mac will remain at the 2007 level of $417,000 for one-unit properties. Higher limits will continue to apply for Alaska, Hawaii, Guam and the U.S. Virgin Islands, as well as for properties with more than one unit.

The Conforming Loan limit determines the maximum size of a mortgage that Fannie and Freddie can purchase. By law, the limit is based on the October-to-October change in the average house price in the Monthly Interest Rate Survey of the Federal Housing Finance Board. While the average house price in the survey declined by 3.49% over the last year, the OFHEO once again…

House Bill HR-3915 Passes, Now Heads to Senate

Well, after a few agonizing days, and a relentless email campaign by many in our industry, the House of Representatives finally passed the new Mortgage Reform and Anti-Predatory Lending Act of 2007 (HR-3915) on Thursday. Thankfully, the final Bill was amended to remove the controversial ban on the use of yield spread premiums, which would have crippled the mortgage lending industry; and, in turn, further promoted the current housing slump by raising interest rate costs to anyone looking to finance a new mortgage loan.

 While we agree that some of new Bill's proposed changes will be good for our industry as a whole, we totally disagree that Congress should be in the business of trying to legislate good…

Now that a Federal Judge has at least temporarily blocked HUD from doing away with Down Payment Assistance Programs (DAP), we thought it might be a good time to review their requirements. Many first time homebuyers need this type of help and since HUD has filed an appeal, using this window of opportunity might make sense, especially with the recent drop in mortgage interest rates.

DAP programs permit the seller to contribute up to 6% towards down payment and closing costs for the buyer for a small charge collected as a fee by the non-profit organization. The typical charge is from $250-$500, depending on the provider and the amount of the assistance.

When used in combination with a FHA loan program, buyers can essentially purchase a new home with very…

A U. S. District Judge issued a temporary order yesterday blocking HUD's new rule prohibiting the use of seller-financed mortgage down-payment assistance programs. Such programs allow non-profit organizations, like AmeriDream and Nehemiah, to help buyers with down payments and be reimbursed by the seller. HUD, the IRS, and the Government Accountability Office had questioned the value of these programs, noting that "borrowers who used them were more than twice as likely to default on their mortgages or become delinquent in their payments" versus other borrowers with loans backed by FHA.

In a four-page ruling the Judge said HUD “failed to supply a reasoned analysis for its departure from its long-standing policy of approval” of the program and that such a…

The Department of Housing and Urban Development (HUD) announced on October 1, 2007, its final ruling on seller paid down payment assistance. The new ruling identifies seller funded down payment assistance programs in a new home purchase as an unacceptable source of funds. Any transaction in which the seller makes a contribution to a third party, such as a non-profit Gift/Grant Program organization, and the entity then makes a contribution to a borrower for the purpose of down payment assistance, has been ruled unacceptable.

The effective date of this ruling is October 31, 2007. The only exception is the Nehemiah Down Payment Assistance Program which has been granted a six month extension through March 31, 2008. It is expected that the Federal Housing…

If you've found yourself in the nerve wracking and precarious position of not being able to make your mortgage payments - or you're consistently paying late and receiving phone and mail contacts - this information is custom made for you. It may surprise you that most mortgage servicers (the company that collects your payment) want to work something out with you. However, if you don't answer their phone calls or respond to mail inquiries - then you're not going to get any help and will probably lose your home and ruin your credit for years to come.

Based on the reason why you've become delinquent, the mortgage company may suggest plans to help get you current again. But, be aware that ignoring them will not make the situation go away and the longer you…