“Live to the point of tears.”
~ Albert Camus
GMAC Bank Correspondents should know that GMAC Bank has revised the minimum credit score requirements for all FHA transactions and will no longer accept a credit score below 580, regardless of the underwriting method (AUS or manual). “In addition, GMAC Bank is implementing new mortgage payment history requirements for streamline refinance transactions. Non-Credit Qualifying Streamline Refinance: 0 x 30 during the previous 12 months or life of loan if less than 12 months; Credit Qualifying Streamline Refinance: No more than 1 x 30 during the previous 12 months or life of loan if less than 12 months.” GMAC was also kind enough to remind sellers that they require a functional kitchen (having cabinets and a working sink) for all FHA loans, and that “all properties must be habitable and all appliances, plumbing, electrical, etc. must be functional and in good working conditions.”
Chase Correspondent, as part of the ARRA signed a few weeks ago, came out with their temporary increase in the 2009 loan limits, to equal the higher of the 2008 Economic Stimulus Act loan limits or the 2009 Housing and Economic Recovery Act loan limits. They are rolling it out in two phases. In the first phase, starting today Chase Correspondent will begin accepting FHA loans under the revised 2009 loan limits made available under the American Recovery and Reinvestment Act. In phase 2, for the ARRA loan limits on Agency transactions, Chase (and other investors) is awaiting additional direction from the agencies. Upon receipt of this information, they will analyze the Agency requirements and “will advise you of Chase’s policies and procedures in a separate bulletin.” For Chase, the base loan amounts continue to be considered standard FHA loans (1 Unit, $417,000, AK and HI $625,500, etc. based on units).
For Chase, FHA loans with base loan amounts greater than these standard loan amounts are considered to be “FHA High Balance” loans, and the maximum base amounts ratchet up to $729,750 (or $1,094,625 in AK and HI), 2 units $934,200, etc. Chase reminds us that the maximum eligible loan amount varies by state, county and number of units, and can be found on HUD’s Web site at: https://entp.hud.gov/idapp/html/hicostlook.cfm
More has come to light about the modification program, which goes through 2012. Participating loan servicers will be required to evaluate mortgages at risk of default to determine if they qualify for the program. If they do, those companies can reduce total monthly housing payments to 31% of the borrower’s income by reducing the interest rate to as low as 2 percent for five years, extending terms up to 40 years and forgiving part of the principal. Once the lender reaches the 38% income threshold, the government will kick in matching funds to help lower it to 31%. Underwriting-wise, borrowers will have to provide their most recent tax return and two pay stubs and prove “hardship,” such an increasing housing payments or decreasing income.
A Mortgage Banker’s Association survey shows that Florida leads the nation with one in five (yes, that is 20%) home loans one month or more past due, the highest delinquency rate among the 50 states. Of those, almost 9% (320,000 homes) were in foreclosure, compared to a nationwide level of 12% delinquent and 3.3% in foreclosure, representing 1.9 million properties.
Fourth largest bank Wells Fargo cut its dividend 85%, saying it will save $5 billion a year. This follows JPMorgan Chase & Co, PNC Financial Services Group Inc and US Bancorp, along with many others. Bank of America Corp has cut its quarterly dividend to a penny per share, and Citigroup, which saw its share price go below $1 yesterday, eliminated its payout. As we all remember, Wells snatched Wachovia from Citi’s jaws for $12.5 billion on Dec 31st.
Yesterday was another good day for rates, at the expense of the stock market. Treasury securities started the day much higher, being viewed as a “safe haven” since large bank and financial service companies are being viewed nervously. Mortgage prices improved, but not quite as much (lagging) due to early pay-off fears. The long-await Unemployment data came out this morning, showing that Nonfarm Payrolls dropped 651,000 jobs in February, pushing the unemployment rate to its highest in 25 years at 8.1%. Although the number was in line with expectations, the January and December job losses were revised sharply higher to -655k and -681k respectively. (December’s payroll losses are now the worst since October 1949.) Job losses in February were broad based, with only government, education and health services adding jobs. After the number the 10-yr is back up to 2.86% and mortgages are a shade worse in price.