Perhaps you recently heard from your Realtor, lender, or the national news that interest rates were going to rise.  Around March it seemed to be one of the top headlines in the real estate industry and it has turned out to be another classic example of why I DON’T put much stock in economic predictions.

Here’s just a few I had read:

“Rates are going to be higher than they are now,” Jay Brinkmann, chief economist for the Mortgage Bankers Association told CNNMoney.com.

“Mortgage rates are unlikely to go lower than they are now…” Christopher J. Mayer, a professor of finance and economics at Columbia Business School (NY Times).

“Clearly, when they stop printing all that money, it’s going to be a shock to the system. I have to assume that when they pull back on it, it will cause a 100- to 200-basis-points rise” to rates of 6 percent or 7 percent, he said. “When they start selling off the stuff they purchased, which by my guess would come early next year, that would cause another 100- to 150-basis-points rise.” Christopher Thornberg, principal at Beacon Economics in Los Angeles told the San Francisco Chronicle.

Nearly all economists had seemed to agree that when the Fed ceased purchasing mortgage backed securities in March that this would undoubtly force rates higher (among other factors).  The logic made sense. But the reality is our economy is so complex and dynamic that no one really knows.

I don’t write this blog saying rates are going to stay low or that they’ll go higher.  I’ll leave that up to you to decide.  I just find it interesting that even after years of failed predictions that so many people boldly make (or repeat) economic predictions as though they are a matter of fact.  It’s especially troublesome when I hear those opinions used as pressure tactics, not by the economists, but by agents or lenders who repeat them (e.g. “you better buy now… rates are going to go up”).

1) Source: Boise US Bank Branch. Subject loan underwriting requirements

Information not guaranteed & subject to change without notice.

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- First-time home-buyer
- No private mortgage insurance required
- Owner occupied
- Check the income limits chart for qualifications
- No sales price limits
- Minimum borrower contribution $1000
- Borrower must complete Home-Buyer’s Education class
- Up to 100% Loan to Value for home-buyers with credit scores of 680 or higher
- Up to 97% Loan to Value for home-buyers with credit scores of 660 or higher

You can contact a local IHFA Lender here to determine your eligibility.

The  above information is not guaranteed & is subject to change without notice.  Please visit the www.Idamortgage.com website for more details and the latest information.

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If you disagree with your assessment you should call the phone number listed on your assessment notice.  If the appraiser doesn’t agree with your argument for a lower value you can appeal the assessment with the Ada County Board of Equalization.  The deadline to file the appeal is June 28, 2010.

Information deemed reliable but not guaranteed.

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In an effort to address this problem the government has launched the Home Affordable Foreclosure Alternatives Program (HAFA).  This program is designed to allow eligible homeowners (the borrower) to work with their lender (the servicer) to determine the required net proceeds prior to putting their house on the market.  It will take some time to see if this program is successfully implemented but if it is it could have a very positive effect on the market.

Background

In February 2009, the government launched the Home Affordable Modification Program (HAMP) designed to help borrowers stay in their homes by modifying their existing mortgages. Over 1 million homeowners have gotten help from this program (1) but there’s still been a large gap of people it has not able to assist.

HAFA, which took effect April 5, 2010, was designed to compliment HAMP by providing an alternative for the borrower who are HAMP eligible but still unable to keep their home.  The two primary foreclosure alternative methods under HAFA is a short sale or deed-in-lieu of foreclosure.   HAFA offers financial incentives to the cooperating servicers as well as up to $3000 for borrower relocation assistance. Not all lenders are not required to participate in these programs but many do.  You can search for a list of participating servicers here.

Basic borrower eligibly requirements

• Property must be primary residence
• Amount owed on first mortgage must be less than $729,750
• Difficulty paying mortgage as a result of increased mortgage payment or hardship (medical, etc.).
• First lien originated before 1/1/2009
• Monthly payment on first mortgage is more than 31% of gross income (principle, interest, taxes, insurance, and HOA dues)

Find out if you could be eligible.

Summary of HAFA short sale time-line

Please keep in mind HAFA is complex program with 45 pages of guidelines & forms. The following is a generalization of the process.

• Determination of borrower eligibility by contacting the servicer. The servicer will want to up-to-date financial information on the borrower and will determine available options.
• The servicer will determine fair market value (FMV) by ordering a Broker’s Price Opinion (BPO) or an appraisal (if there’s a second mortgage with another lender they will also have to approve).
• Within approximately 30-60 days the mortgage servicer will send the borrower a Short Sale Agreement (SSA) with an acceptable offer price.
• The borrower has 14 calendar days to return SSA (which is also signed by listing real estate broker).
• The borrower is given 120 days to sell the house (may be extended if agreed to by borrower & servicer).
• Within 3 days of receiving an executed purchase & sale agreement the borrower/listing broker submits a Request for Approval of Short Sale (RASS) to the servicer with required documents.
• Within 10 business days of receipt of RASS the servicer must approve or deny the request.
• Closing.

Please visit www.makinghomeaffordable.com for more information.

This information is subject to change without notification. No representation or warranty of any kind is made.

(1): www.makinghomeaffordable.gov/hafa.html (as of 5/11/10)

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