mortgage

FHA mortgage premiums about to go up

For those who qualify for low interest loans, things are about to get a little more pricey. Earlier this month, the government accounted the FHA Mortgage Insurance Premium will increase 10-15 points (0.10% on mortgages under $625,000, 0.15% for that amount or more), raising concerns that those affected will be lower income and first-time home buyers. Although one of many increases that have occurred over the past few years, this increase will become permanent and will require insurance for the life of the loan, but is mainly aimed at long-term housing market stability by making loans less risky. However, many rely on FHA loans for low down payments (15.41% of homes in 2012 were purchased using an FHA loan), and making home loans less affordable could put a damper on market recover.

The rate increases are set to go into effect on April 1. In the past, the insurance would fall off at 22% equity, but now monthly insurance payments will be required for 30 years on a 30 year FHA loan, unless a 10% down payment is made at the outset.

Looking to buy a home in Northeast Los Angeles? Contact Urban Hillsides today!

Mortgage Debt Relief Act extended through the new year

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According to a survey by YouWalkAway.com, the extension of the Mortgage Debt Relief Act of 2007 will drive more short sales in 2013.

The act was set to expire at the end of 2012, but Congress voted to extend it another year, thus providing debt forgiveness for underwater homeowners who choose a short sale, loan modification, or foreclosure rather than defaulting on their loan.

While the report doesn't see a new wave of mortgage defaults this year, the extension of the act will provide tax relief for those homeowners who are currently in foreclosure. New foreclosure applicants, however, can only expect to have that tax relief for a year (which is how long the act has been extended) – a time period that may not be enough because of how long some foreclosures can take.

As an alternative to defaulting on your loan, a short sale or loan modification may be the best route.

Ready for a new servicer on your loan?

Bank of America may have just unloaded two million loans (totaling $306 billion) to other lenders, but it’s already looking to sell rights on at least $100 billion more MSRs. Last week, BofA started with selling $306 billion in mortgages to Nationstar Mortgage Holdings and Walter Investment Management. The move is not unusual – lenders have been known to do it as costs rise and servicers go bankrupt. Additionally, Basell III capital rules will soon take effect, forcing banks to “hold more capital for mortgages serviced or to put less premium on the value of MSRs.” Servicing companies are exempt from this rule, so they are eager to buy.

Ally Financial and JP Morgan are looking to do the same soon.