Wells Fargo Clarifies Short Sale Criteria for Foreclosure Postponement

The National Association of Realtors (NAR) issued a notice this week explaining Wells Fargo’s new rules surrounding short sale transactions when a foreclosure is pending.

Earlier this month, Wells Fargo advised NAR that it has modified its existing guidelines to allow the postponement of a scheduled foreclosure in connection with a short sale, but only in limited situations. Please check my website at www.shortrefiusa.com

NAR explained that for loans owned by Wells Fargo, including those inherited with the bank’s Wachovia acquisition, as well as other loans serviced by Wells Fargo but owned by an investor, the policy allows for one fore-
closure postponement, but only if: (1) Wells Fargo has a short sale sales contract in hand that has been approved (including approvals from junior lien holders and mortgage insurers, if applicable), (2) the buyer has proof of funds or financing approved, and (3) the short sale can close within 30 days of the scheduled foreclosure sale. For alternante solutions please visit my website at www.shortrefiusa.com

However, Wells Fargo noted that not all investors allow for such postponements and stressed that in jurisdictions where the courts will not approve the delay, the postponement policy will not apply. Wells Fargo told NAR that it is willing to address situations that do not qualify under these guidelines on a case-by-case basis.

Last month, it was reported that Wells Fargo had stopped delaying foreclosures in order to allow distressed homeowners to complete short sales. But as NAR outlined, the foreclosure timeline can be pushed back for a short sale as long as Wells Fargo’s specified criteria are met.

NAR has been holding meetings with the nation’s four largest lenders, including Wells Fargo, to address concerns about their processes for short sales and REO disposition. The trade group’s talks with the banks are ongoing, but NAR has indicated that the discussions have been productive in fostering mutual success and support for a market recovery.

Wells Fargo has been approving Short Refinances call me for details. Contact Robert at (562) 673-1136

America's Real Mortgage Rate!!

Record low mortgage rates? Too bad no one is taking advantage of them. Most homeowners still pay around 6% for their loans.

Mortgage rates dropped to another record low this week following the Fed's move to pump hundreds of billions of dollars into the U.S. economy. Though officials hope that buying Treasuries with newly-printed money will give the slow-growing economy a big boost, the move likely won't give today's homeowners much relief. Any Questions about refinancing please call Robert at 562-673-1136

Now is one of the cheapest times in decades to finance a home, but few are actually locking in record low mortgage rates. This isn't just because many don't qualify for refinancing as home prices plummet and banks continue to enforce tighter lending standards.

It's also because many owners who locked in relatively low rates between 2003 and 2005 don't think it's worth refinancing, according to a U.S. Federal Reserve study of the mortgage market released in September. This is a factor that has largely been overlooked. Please visit my website if you have questions about principle reduction www.shortrefiusa.com

It's true millions have been trying to redo the terms of their home loans to reduce their monthly payments. Yet a sizable group also thinks their current interest rates are at least bearable – they don't want to spend the money or time to take out a new loan for only slightly lower rate.

Mortgage rates are at their lowest since at least 1971. The rate for a 30-year fixed loan fell to 4.17% in the week ended Thursday from 4.24%, according to Freddie Mac (FMCC). The average 15-year rate declined to 3.57% from 3.63%.

But interest paid on the vast majority of home loans is much higher than the record rates, according JPMorgan, which tracks the outstanding U.S. mortgages by major lenders including Freddie Mac and Fannie Mae (FNMA). As of October 31, only about 16% of fixed-rate mortgages and 12% on floating mortgages paid between 4% to 4.99%.

A relatively bigger proportion, about 27%, are adjustable rate mortgages that fluctuate with the market and pay a lower rate ranging between 3% to 3.99%. Still, at least half of outstanding home loans still pay 5% or higher regardless of whether a fix or floating rate.

Historically when rates have dropped significantly, there's typically a flurry of refinancing.

And indeed, that happened recently when the average annual rate for a prime-quality 30-year fixed rate mortgage fell abruptly at the end of 2008 and through 2009, falling below 5% in April and May. Refinancing boomed, peaking to more than 645,000 loans in May 2009 before dropping back to monthly levels similar to those seen in 2006 and 2007, according the Fed's report.

But the recent surge in refinancing doesn't compare to what was seen historically – it's in stark contrast to the levels seen between 2001 to 2003 when rates fell sharply. In 2003 when rates were slightly more than 5%, the volume of refinance loans rose to more than 15 million, markedly greater than volumes in 2009 of about 5.8 million loans.

"There's a lot of head scratching right now as to why people aren't refinancing," says Freddie Mac Chief Economist Amy Crew Cutts. "The applications are high but the closings are low."

Cutts points to various factors, including high unemployment, home values falling well below the balances of mortgages and stricter lending standards at many major banks.

Whatever the reason, it appears homeowners aren't benefiting much from the Fed's policy prescription to accelerate the economic recovery. Who knows how low mortgage rates will go or if it will even matter months from today.

Who pays what? E-Mail Rob at Robsavestheoc@gmail.com

Robert Vaughan
Vice President/ Managing Partner
(562) 673-1136