Over 20% Say Housing Will Affect Their Choice for President

by Jacob Passer, National Mortgage News – June 22, 2016

More than one in five Americans say the presidential candidates’ policies on housing and finance will shape their vote in November, according to the results of a survey conducted for loanDepot.

Altogether, 21% of survey respondents said that these policies will influence their choice of candidate, loanDepot reported Wednesday. But 36% of survey-takers said that the presidential candidates are not articulating their policies in these areas well.

Nevertheless, folks across the country are hungry for more: 35% of respondents said they want to hear more from the candidates on housing and finance, and that figure rose to 56% for Democrats and 39% for Republicans.

“People across the nation told us they want to hear more from the presidential candidates about their housing and financial policies on issues like income, access to credit, interest rates and affordable housing,” loanDepot Chairman and Chief Executive Anthony Hsieh said in the release.

“The candidate who does a good job in communicating their policies moving forward has an opportunity to influence millions of potential voters.”

Regarding the next president’s first 100 days in office, 37% of respondents said increasing the affordability of homeownership for lower- and middle-income families ranked as the top economic or housing priority to be addressed. Next was keeping interest rates low, 34%, and increasing the availability of credit to small businesses, 11%.

Nearly half of both Democrats and Republicans also responded that they wanted interest rates to remain low during the first 100 days of the next president’s term.

As for voters’ expectations of how the next president would affect their financial situation, 66% said they expected their situation to remain the same while 24% believe they will be worse off. Just 6% of voters expect the next president to improve their financial situation.

But loanDepot noted in the survey that voters’ perceptions don’t always align with reality. Case in point: 38% of respondents said they think it is harder to get a home loan today than it was immediately after the financial crisis. But as loanDepot notes, citing data from the Federal Reserve, denial rates for purchase loan applications reached 18% in 2008 versus 13% in 2014, the most recent year for which data is available.

The survey was conducted by Omniweb and included 1,000 adults, split evenly between men and women.


Back from the Housing Brink

Back from the Brink logo

 

 

Sponsored by the Gulf Coast Chapter of the Florida Association of Mortgage Professionals, a member of the Pinellas Realtor Affiliate Business Partners Program

 

“Back from the Housing Brink” defines 3 different client types that have developed from the housing crisis and where opportunity exists for loan originators and realtors to assist these clients.

GulfCoast Chapter of the Florida Association of Mortgage Professionals wishes to thank the Pinellas REALTOR Organization for joining with us to support this program!


Pro member

nonPro member

 

Special Guest Daren Blomquist, Vice President of RealtyTrac

RT.Daren lg
Status of Distressed Homeowners and Boomerang Buyers
  • Defined, statistics, where these homeowners are at and where they are moving to in the U.S. and specifically Florida.
Assist 7.1 million Distressed Homeowners (still in underwater homes) to stay put
  • PURE HARP refinancing, shorter term
  • Hardest Hit Funds available for principal reduction through Florida
Assist 7.3 million Boomerang Buyers (had past short sale or foreclosure) eligible to re-enter housing market over next 8 years
  • wait timeframes for all mortgage types
  • Shorter wait time frame underwriting criteria for FHA “Back to Work” and conventional mortgage “Extenuating Circumstances”
Assist real estate agents to sell damaged housing by providing repair list with costs and renovation loan financing at listing upfront
  • Retrieve “feasibility report” commonly done by FHA Inspectors and useful to attract buyers and for mortgage financing. Report cost: $200-$250.
  • Provide financing option upfront for either FHA 203K (owner occupied loan) or conventional Homestyle renovation loan (owner occupied, 2nd home, investor)

Challenge to mortgage and real estate industries:
Need for refinance option of non-Fannie Mae, non-Freddie Mac 1st mortgage and 2nd mortgages and HELOCS for 7.1 million homeowners still underwater! Only option currently is modification that requires delinquency.

Realtor/Loan Originator resources:
  • Specialized lists from RealtyTrac
  • Free promotion of industry professionals who would like to assist these clients at HELP Network on *HousingCrisisStories.com

*HousingCrisisStories.com is set up to provide buyer and loan originator assistance to prepare cases for underwriting FHA “Back To Work” and where “Extenuating Circumstances” may exist for a conventional mortgage. Lenders who provide FHA Back to Work, allow Extenuating Circumstances and provide pure HARP 2 will be promoted.

Homebuyers/Homeowners resources:
  • Downpayment assistance: Hillsborough, Pinellas, Pasco, Hernando, Citrus counties, state of Florida
  • “Fix It” programs for those with no equity: Pasco County
  • Student Loan consolidation/refinance program

 


Rental Problem, Dwindling Income

Sept. 21, 2014

I found your website through a google search and I wanted to get in contact with you and see if you may be able to help my wife and I obtain a mortgage.

To describe our situation better to you, here is the current situation we are in. My wife and I had purchased our first home, which was a town home in 2006. We outgrew that home because we had a baby and it was a small town home, and in addition I ended up taking a job that required me to travel further to work. Because of the housing situation and everything being under water, our only option we to rent out the town home and purchase a home that was more adequate for our size. Since it was our first time renting, we were very nervous doing so, so we decided to hire a property management company for us and pay them to ensure we were getting a renter of good quality in there. Even with paying the property management company we were losing roughly $400 per month on the place, however with our high income it still allowed us to take the loss.

However 8 months into the renting process, the renter did roughly $20,000 worth of damage to our property at the town home and stopped paying rent, and eventually moved out on her own. Because of the lack of funds to invest another $20,000 into fixing the town home just to get it back into rental shape, on top of the money we were already losing per month on it, and at that time my side business income had dwindled, we were facing a financial difficulty all of the sudden.

We were forced to do a short sale on the town home. We even attempted to do a short sale by keeping our mortgage current as well and the lender, Wells Fargo, informed us that they would only work with us on the short sale if we stopped paying on the mortgage. It was a difficult decision to make because we haven’t defaulted on anything we owe on, but unfortunately it was something we would have to face in the future regardless had they not approved a short sale as our savings and income was dwindling due to the town home property.

Wells Fargo approved our short sale on December 2013, roughly 9 months ago. We have not missed payments on anything since. We are currently looking to sell our current home and purchase another home closer to my parents as they are aging and we would like to help take care of them. Our current home is currently valued at roughly $60,000 more than what we will be able to use that profit to put down on the new house we would like to purchase. We currently have already found the home we would like to purchase and have listed our current home for sale. However I was not aware how difficult this would be to obtain a mortgage since our short sale is not even a year old. My wife and I both have a combined income of over $100,000 per year and our credit scores are both over 700.

Are there any options available that you may be able to help us with?

Thank you for your time and consideration and I hope to hear from you soon!

Sincerely,
Chris, Florida

 


Real Hardship: Be Grateful That You don’t Have It

By Pam Marron

Troubled by negative comments directed at Senators Warren, Menendez and Merkley about their questioning of Federal Housing Finance Agency director Mel Watts’ reluctance to allow principal reduction for underwater homeowners, I had to write.

Every discussion about how to help millions of homeowners that are STILL  underwater (in a negative equity position) starts like this: “If they hadn’t taken out a second mortgage to buy all of those toys” or “bought more house than they could afford”, they would not be in this position.

Here’s the reality of the majority of these cases. Divorce happened. Families grew or kids moved out, resulting in need of a move for growth or downsizing. Jobs were cut and folks had to move to regain employment, or couldn’t afford their existing mortgage with a new job obtained. All of these reasons are why folks have to move. But, when an underwater homeowner must move and a short sale is contemplated, there is harsh judgment for how they got underwater, even when the need for a move is from real hardship.

The problem worsens when lenders require mortgage delinquency first to approve the short sale. This is still required today and I have seen very few exceptions where short sellers were allowed to make payments to the closing date. Little attention is given to the lender servicing practice that requires the delinquency. Instead, loads of press has reported on the “strategic defaulters”, those who can make their mortgage payment but choose not to. There has been virtually no press that many so-called strategic defaulters weren’t making their payment because it was the only option they were given to get short sale approval and exit their home…. advice given to them by their lender.

I am a mortgage broker in Florida, where 28% of home mortgages are still underwater. Three years ago, the percentage was around 62%. My sites were set on helping folks back into the real estate market when they could re-enter. During these years, a pattern became evident. Underwater homeowners were being told by their lenders that the only way they could get approved for a short sale was to go delinquent. These homeowners were bewildered that their credit had to be stellar to get the mortgage initially, and now they were being told that to exit the home the credit had to be delinquent.

Not believing this, desperate homeowners allowed me to be on calls with their lender to confirm what they were telling me. It was clear, and with multiple lenders and homeowners. The requirement to be delinquent on mortgage payments in order to get short sale approval was told directly to affected consumers by their mortgage lenders, and on recorded calls.

The reality was that many underwater homeowners were willing to make mortgage payments during the short sale process, but mortgage lender servicing rules required these homeowners to be delinquent.

Underwater homeowners face a lose-lose proposition. If the homeowner must sell but does not have the funds to pay the difference needed between the mortgage balance and the lower house value, a short sale, foreclosure or renting out the home are their only options.

Loss on Three Options

1. Short sell: the homeowner works with the lender on a lengthy process that, to this day, requires delinquency of the mortgage. Hardship must be explained by the homeowner and acknowledgment is part of the approval process for the lender short sale. Credit is incorrectly coded as a foreclosure after 120 days of delinquency which results in a new mortgage denial years later when past short sellers are eligible for a new conventional loan. And, a foreclosure requires a 7 year wait rather than the 2 year wait after a short sale, per Fannie Mae and Freddie Mac [1]Seller Guides. And recently, we are seeing [2]Fannie Mae and [3]Freddie Mac coming back after past short sellers for deficiencies, per 9/24/2013 FHFA Recovery Reports.

2. Foreclosure:  the homeowner ceases to make payments or is turned down for a short sale. Credit is coded as a foreclosure which results in a 7 year wait for a new conventional mortgage.

3. Renting Out Underwater Home: many did this years ago when a move from the home had to be done. However, many who rented are now preparing for a short sale, financially wiped out after years of making up the difference between rent received and the mortgage payment.  Many tried this option hoping to eventually have enough equity to sell the home without a loss. However, the rate of appreciation has not happened quick enough, and those who are still trying to dig out of these properties often have little or no choice but to short sale.

And for those underwater homeowners trying to stay in their home, a refinance available called HARP 2.0 has had limited success because many lenders cap the amount of negative equity… for a program that has no cap on negative equity! And, if you have a conventional mortgage that is not owned by Fannie Mae or Freddie Mac, there is no refinance for you.

So how do you answer the common perception that “those who are underwater got there on their own accord” and “what will be done for all who are NOT underwater?”

Here’s the answers:

  • Be grateful that you are not in the shoes of those still underwater, that your credit is not wrecked, and that you can get on with your life.
  • U.S. Housing: Seriously work on and get implemented HARP 3.0, or an alternative refinance plan that allows unlimited loan to value (like it is supposed to!) for all conventional mortgages including Fannie Mae and Freddie Mac. Give a pricing incentive to lenders who apply REAL written guidelines to these loans, instead of so many overlays and limits that fewer homeowners can get any benefit. This is not a handout. These are performing loans and banks will make a profit while building goodwill.
  • Don’t take advantage of these folks, who are either locked out or still having trouble getting a conforming mortgage, even though Fannie Mae and Freddie Mac have specific rules that allow these mortgages. Non-QM mortgages at higher rates have come into the mortgage marketplace and qualified consumers must often settle for a higher rate with non-QM lenders even though they meet criteria for a new mortgage with Fannie Mae and Freddie Mac.
  • Pay attention to the credit of these consumers that is being destroyed! There seems to be little regard for credit that continues to be screwed up for folks who have gone through a short sale. Credit is the key to the growth of our country. New credit products promising better service continue to be pushed, while consumers with credit problems who have proof of the real credit have to pay enormous amounts of money just to get corrections.
  • Stop ignoring the underwater mortgage problem and judging those affected as “strategic defaulters en masse”. The majority of those affected are trying to get on with their lives and want to contribute. There will always be takers, but [4]reporting of strategic default has been over stated.
  • Ask these folks what REALLY happened, and you will hear unbelievable stories of hardship where great thought went into how to dig themselves out.
  • States that have Hardest Hit Funds available for underwater homeowners need to promote this.

For all homeowners who are not underwater, be damn glad you are not in their shoes.

 

 

[1] Requirements for an FHA, VA and USDA mortgage are different.
[2] FHFA Can Improve Its Oversight of Fannie Mae’s Recoveries from Borrowers Who Possess the Ability to Repay Deficiencies http://fhfaoig.gov/Content/Files/AUD-2013-011_0.pdf
[3] FHFA Can Improve Its Oversight of Freddie Mac’s Recoveries from Borrowers Who Possess the Ability to Repay Deficiencies  http://fhfaoig.gov/Content/Files/AUD-2013-011_0.pdf
[4] Unemployment, Negative Equity, and Strategic Default/Federal Reserve Bank of Atlanta/August 2013 http://www.urban.org/events/upload/Gerardi-Kerkenhoff-Ohanian-Willen-Strategic-Default.pdf

 


Past Short Sellers Can Be Homeowners Again!

  • Please note that this problem only existed for conventional mortgages for Fannie Mae and Freddie Mac. Because of the parallel Total Scorecard automated system, FHA and VA loans are not denied in the system. Both Fannie Mae’s Desktop Underwriter/Originator and Freddie Mac’s Loan Prospector require an underwriter to verify the past mortgage was not a foreclosure.
  • The Fannie Mae”fix” did not work on Nov. 16, 2013. However, filing the complaint that with the CFPB does commonly result in the short sale credit code being downgraded.
  • On August 16, 2014, Fannie Mae came out with a workaround that does work. And the Fannie Mae Desktop Underwriter/Originator automated approval system is not providing a denial or “Refer with Caution” for past short sales in most cases. However, the Freddie Mac Loan Prospector automated system still provides a denial.