Beware buying a home from a divorcing couple!!

NEW YORK (CNNMoney.com) -- Marriage break-ups can be tense. And when divorcing couples sell their homes, it's buyer, agent and everyone else beware.

There are about one million divorces a year in the United States and in most cases, there's a home that needs to be sold. That can mean great bargains, because couples divorcing -- like those in foreclosure -- are often among the most motivated of sellers, willing to accept offers below market value.

Still, house hunters may well pay the price in terms of aggravation and time when working with these sellers.

Buyers must wade through the venom generated by the divorce. Often, one spouse is anxious to sell while the other tries to sabotage the deal -- either out of spite or an unwillingness to end the marriage.

"Most of my divorcing clients dislike each other very much so navigating the transaction can be tricky," said Scott Weeda, a Seattle-based real estate agent who specializes in divorce.

We're too afraid to buy -- despite low prices
In other cases, one spouse may delay signing off just to aggravate the ex. Other times, one party may want to maximize the profits while the other just wants to get out.

"In many cases, the joint ownership is the only remaining tie that connects couple selling," Weeda said. "They sometimes want to cut that ASAP."

Buyers may find themselves in agreement on a deal with one spouse until the other vetoes the deal. Sometimes, buyers don't even know there's a problem until the last minute.

Charles Vallis, a Massachusetts-based agent for discount broker Redfin, had a recent sale in which his buyers went to contract and had a closing date, but then the wife in the divorce disappeared.

"She was nowhere to be found for the last few days before closing," said Vallis. "The day before, their attorney notified us that they might not be able to close because the wife was unreachable

One of the buyers, Megan McGuire, who works in public relations for a large law firm, said she "floored" by this. "We thought it was really reckless on her part."

She and her husband, Josh Ledeen, had already given notice at their rental and had made a date with the movers. "We would have been out on the street," said McGuire.

Vallis kept leaving messages for the wife and calling her attorney, who couldn't reach her either. Luckily, her husband was anxious to sell. He even changed the locks before the final walk-through because he feared his wife might damage the interior.

After days of desperately trying to contact the wife, the sellers' attorney finally got a call back and read her the riot act about the legal consequences of breaching the contract. The sale closed on time -- but the agitation cost the buyers sleepless nights.

To try and avoid these situations, Randy Morrow, an Arlington Va.-based real estate agent who represents divorcing couples, tells potential buyers to find out early whether a divorce is acrimonious.

Then, there's a very good chance the settlement will not happen on schedule," he said. "Buyers should talk to their agents about placing protective language in the offer. If a case is really nasty, I would tell my clients to run."

Carol Ann Wilson, an expert in divorce financial planning, also advises house hunters to delve deeper into the sellers' backgrounds if the sale involves a divorce.

"If buyers find that both parties haven't signed off on the selling agreement," she said, "buyers should back off. The deal could be easily derailed."


Thanks for checking out my blog if you have any questions about refinancing or buying or selling a home please contact me. (562) 673-1136

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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

Underwater Borrowers Get a Lifeline on September 7

With as many as 20 million homeowners going underwater by 2011, there could be a lot of interest in this new program.

"We're throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined," FHA Commissioner David H. Stevens said in a statement. "This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product."

The new loan product, called the FHA Short Refinance option, is targeted for those homeowners who are paying on time, but saw large declines in home values in their local markets. If your home is underwater and your interest rate is above 6 percent, you should definitely consider this. Even if you have a good interest rate, the write-down of your first and/or second mortgage may make this deal worth considering.


To qualify for this FHA refinance opportunity, you must be current on your mortgage, and your lender or investor must be willing to write off at least 10 percent of the original first lien on the mortgage. The big hitch is that you must have the consent of your current mortgage lien-holders, so if your lender refuses to participate, you won't be able to take advantage of this refinance program.
For your loan to qualify, you must meet these conditions:


- Your mortgage must be in a negative equity position.
- You must be current on your mortgage to be refinanced.
- You must occupy the subject property (one to four units) as your primary residence.
- You must qualify for the new loan under standard FHA underwriting and your FICO score must be greater than or equal to 500.
- Your existing loan must not be an FHA-insured loan.
- The existing first lien-holder must write off at least 10 percent of the unpaid principal balance.
- The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent.
- If you have other subordinate mortgages (such as an equity line) they must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 percent.
- Your total monthly mortgage payment, including the first and any subordinate mortgage(s), cannot be greater than 31 percent of gross monthly income. And total debt, including all recurring debts, cannot be greater than 50 percent of gross monthly income.
- You cannot use the new FHA mortgage to pay off existing debt obligations in order to qualify for the new loan.

If you've already undergone a loan modification, you may still qualify for these new FHA loans. Anyone whose loan was modified under the Making Home Affordable Modification Program may still be eligible beginning the month following the date the modification was permanent. If you were modified using a non-HAMP loan, you must make three on-time monthly payments on the new modified mortgage and be current on the loan.

There are also requirements that you must meet for any secondary financing, such as a home equity loan or home equity line:

- Your subordinate lien must not provide for a balloon payment before 10 years, unless the property is sold or refinanced.
- The terms must permit prepayment by the borrower, without penalty, after giving 30 days advance notice.
- Periodic payments, if any, must be collected monthly.
- Any monthly payments must be included in the qualifying ratios unless payments have been deferred for no less than 36 months.

To encourage second lien-holders to participate and extinguish fully or partially any second lien, the existing second lien-servicer will be entitled to a onetime incentive of $500 for each successful closing. There also will be an incentive for investors, based on the combined loan-to-value of the existing lien, and all senior liens associated with the mortgage.

Hopefully, these incentives will be enough to encourage your lender to participate

Thanks for checking out this blog if you have any questions about shortpay refinance please contact me direct and I will answer all your questions.

Thanks
Robert Vaughan
www.shortrefiusa.com
(562) 673-1136 Direct

The Wasted 4.44% Mortgage Rate!!!

FORTUNE -- It appears even the bright spots of this tired economy are still working against heavily indebted homeowners. Mortgage rates have hit new lows nearly every week, but many borrowers are still unable to take advantage of them.

Like it is in so many parts of today's sideways economy, relief is out of reach. Stimulus dollars are everywhere, but somehow never where they're needed most.

Last week, U.S. mortgage rates fell for the eighth consecutive week to a record low after the Federal Reserve said it would buy more government debt to help the economy recover. A 30-year fixed-rate mortgage in the week ending Thursday dropped to 4.44% from 4.49%, according to Freddie Mac, which noted it was the lowest since the mortgage finance company began collecting data in 1971. The 15-year rate averaged 3.92%.

The fall in rates ostensibly means homeowners can lower their monthly loan payments by refinancing their existing loans. They're certainly trying -- the Mortgage Bankers
Association reported last week that 78.1% of all mortgage applications fell under the refinance category, up from 58.7% in April.

But many of them are filling out all that paperwork only to get a rejection letter in response. The mortgage association does not quantify how many of those who apply for refinance actually get approved, but mortgage brokers say many homeowners are ineligible. Last year the Home Affordable Refinance Program, or HARP, was created to help homeowners get new loans, but the program has only resulted in a small fraction of the refinancings the government aimed to enable.

"The qualifications are so much stricter," says Dale Robyn Siegel, CEO of Harrison, NY-based Circle Mortgage Group and author of The New Rules for Mortgages. "Banks have realized that even the best of borrowers have lost their jobs. A lot of people are really tapped out."

Doors closing

The stricter qualifications include a higher FICO score of at least 620, a higher down payment and lower monthly debt service ratios. Additionally, lenders typically won't loan more than the appraised value of a home. The troubled housing market has left an estimated 15 million U.S. mortgages -- one in five -- worth more than the value of the homes they helped purchase. The growing mountains of paperwork required and higher bank fees have also discouraged some from refinancing.

Add it all up, and you get a 4.44% rate that most Americans can't have.

The government-controlled Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500) either own or guarantee half of the nation's mortgages. Wall Street economists and analysts have called on the Feds to loosen lending standards and give breaks on fees so that more people qualify to refinance. In the short-term, this could free up household incomes and inject much-needed money into a slow-growing economy. But opponents argue it would only add to the hundreds of billions of dollars it will take to prop up troubled Fannie and Freddie.

The U.S. Treasury Department says it doesn't plan to ease refinancing rules.

It's easy argue against the idea of helping homeowners -- even the debt-ridden and jobless -- with their bills. After all, it can be said they bought too much house for their own good and bailing them out would only encourage the kind of irresponsible borrowing that sent the US economy into a financial crisis in the first place.

But lower interest rates, ideally, are meant to encourage investments - something the economy could use right about now. Instead, today's mortgage rates are doing nothing more than tempting those investors who can't have them.

If you have any questions about refinancing or find out what are the latest Mortgage Solutions out there feel free to call me direct at (562) 673-1136

Thank You,
Robert Vaughan
www.shortrefiusa.com

Drowning In Home Debt!! Help Is HERE!!

Lisa Gibbs
(Money Magazine) -- A transfer in 2005 landed Air Force major Richard Hallbeck, his wife, and two kids in Southern California smack in the middle of the real estate bubble. Home prices in the area had doubled in the past five years and were still climbing. So the Hallbecks swallowed hard and bought an $845,000 four-bedroom in a suburb of Long Beach.

The $3,800 monthly payment was high but affordable on two incomes. (Laurie, now 37, worked as a claims adjuster.) And they figured the market was so strong that when they had to move again, they'd at least break even. "Our house actually appraised over what we paid for it," Richard, 42, recalls wistfully.


Since then, area sale prices have fallen 26% -- when properties sell at all. Meanwhile, the recession cost Laurie her job, and the payment on the couple's adjustable-rate mortgage will jump $800 in July. Next year Richard will face mandatory retirement from the Air Force, and his pension will be a third of his current $117,000 income.

All that's got the Hallbecks anxious to move to a more affordable city -- like Dayton, where they used to live. But they're just as anxious about how much they could lose on the sale of their house.

A similar home down the street lists for $655,000, $21,000 less than the Hallbecks' outstanding mortgage. At that price, the couple would be out $231,000, including their down payment and closing costs. "The stress has really worn on us," Richard says.

Nationwide, about one in four home mortgages are now underwater, meaning borrowers owe more than their places are worth. No surprise, California and other bubbly states -- Nevada, Arizona, and Florida -- lead the nation.

While a bevy of new federal programs aim to help, underwater owners who want to move still face uncomfortable choices: Postpone the move and continue sinking money into a pit; sell for a loss, forfeiting the down payment and some savings to close the deal; desperately try to enter into a short sale; or simply walk away and face the consequences of foreclosure. If you (or your kids) are in this situation, here's how to think about the options.

Keep on keeping on!!

If you don't have to move and can afford the payments, it probably makes sense to soldier on and wait for housing prices to recover, says Denver financial planner Ross Schmidt. Moody's Economy.com projects that prices in 61% of metro areas will return to recent peak levels by 2015.

If you live in one of the harder-hit cities -- which may take 20 years to rebound -- and you're more than 25% underwater, your house won't be a financial asset anytime soon. But as long as you're happy to stay in it for many years, that may not matter.

In the meantime, you may be able to cut your loan balance -- and lower your payments -- through a new federal program with Affinity Lending Group that refinances existing loans into smaller FHA loans. To qualify, you must be current on payments -- but it's up to the lender to agree to it www.Shortrefiusa.com.

The Hallbecks might have been eligible for some of this aid, but Laurie is eager to move with the kids by this fall, rather than waiting until Richard retires -- which will be in the middle of the school year.

Beg the bank for a break

What if you need to get out of the house? The Hallbecks initially considered renting their place out. But they'd probably lose money, given the spread between their mortgage payment and rental prices. Becoming a landlord is a risk even in areas where you can cover carrying costs, as you're still on the hook in between tenants, says Maryland financial planner Timothy Maurer.

If you have any questions on these Government Programs or what type of Mortgage solutions you may qualify I'm here to help.






Thank you
Robert A Vaughan
Vice President
Affinity Lending Group
562-673-1136

6 Biggest Mistakes Homebuyers Make!!

Buying a home is the biggest purchase most people will ever make, yet many go into it blind. Here are the 6 most common -- and costly -- mistakes homebuyers make.

1. Not knowing your credit score

If you're even toying with the idea of buying a home, you must find out exactly what your FICO score is. If you find it is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes.
Once you've pored over your credit history and corrected any errors, your next step is to pay down revolving debt balances to no more than 30% usage. That will help raise your score significantly.

Why does it matter?

The lower your score, the higher your costs of borrowing. Fannie Mae and Freddie Mac, for example, charge higher up-front fees to borrowers with credit scores below 740.

For a buyer with a credit score between 680 and 700, the fee comes to 1.5% of the mortgage principal. On a $200,000 mortgage, that adds up to $3,000. Someone with a 740 score pays nothing.

Lower-score borrowers also get saddled with higher interest rates, about 0.4 percentage point more for the below 700 borrower. That costs an extra $62 a month -- $744 a year -- on a $200,000, 30-year, fixed rate loan.

2. Buying a car before a house

Anytime consumers open new credit accounts -- credit card, auto loan, etc. -- their FICO score could drop, according to Craig Watts, a spokesman for Fair Isaac, the creator of FICO scores.
"Hence the admonition to not open other new accounts while your mortgage application is in process," he said.

A big purchase would use up a considerable proportion of a borrower's total credit limit, which results in a drop in the score. Lenders often continue to check credit scores in the weeks before closing.

"The lender will likely slam on the brakes if the applicant's credit scores have suddenly dropped below the minimum required for the requested loan rate," Watts said.

3. Skimping on home inspection

Buying a pig in a poke can cost buyers big bucks -- just when they can least afford it. So It's vital to find all the costly flaws before you buy.
Many homes on the market today are distressed properties -- foreclosures and short sales -- and that only increases the importance of good inspections, according to David Tamny, president of the American Society of Home Inspectors.

"The owners usually didn't have the money to keep up these homes," he said. "There's a lot of deferred maintenance."

A home inspection can find problems with the foundation, electrical, plumbing, roof, attic insulation, and heating and air conditioning. In some states, separate licensed inspectors offer mold or termite inspections.

Often homebuyers, who may be strapped for cash, stint on inspections and look for the cheapest way to go. That can lead to disaster.

"The cost of repairs far exceeds the cost of inspection

4. No lawyer

Nearly everyone involved in a real estate transaction -- the seller, the buyer's real estate agent, the seller's agent and the mortgage broker -- has a vested interest in getting the deal done because they only get paid when the house is sold. So they may push a deal even if it's not in the best interest of the buyer.

One of the best defenses against making am expensive purchase you'll regret is to hire a real estate attorney -- even in cities where it's not standard practice. These professionals charge flat fees and their advice is objective.
It's nice to have someone on your side.

5. No contingencies

When signing a sales contract, buyers usually have to put up 1% to 3% in "earnest money," which they don't get back if they pull out of the deal except under certain conditions spelled out in the contract.
Sellers try to limit the grounds for canceling, and inexperienced buyers may sign contracts that don't include common exceptions, such as uncovering major problems during the home inspection, failing to obtain financing and failure of the house to appraise.

Failure to obtain financing is common these days because lenders have become very picky; underwriting is very strict.

Even if your mortgage company is still willing to finance your purchase, the house itself may be worth less than you've contracted to pay for it, and the lender will pull its approval.

With residential real estate markets still slow, sellers usually accept contingency clauses, but if they resist, it may be better to rethink the deal. Losing a deposit of $2,000 to $6,000 on a $200,000 home hurts.

6. Not budgeting for insurance

Don't underestimate insurance costs and fail to budget for them.

Many homebuyers don't understand just what is -- and what is not -- covered. Standard policies pay for theft and wind, fire, lightning, hail and explosion damage. Not covered is flooding, earthquake damage or problems caused by neglect of routine maintenance, according to Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry-sponsored educational group.

"The most important thing is before you buy a home, find out what it will cost to insure it," she said. "Insurance needs to be calculated into the cost of owning a home. Unlike a mortgage, which you can pay off, you'll be responsible for the insurance costs forever."

For flood insurance, most buyers use the National Flood Insurance Program. Earthquake coverage may be available through a state authority or some private companies.

Depending on location, flood insurance can run into a lot of money. The cost of $250,000 worth of government flood coverage on the building and $100,000 of its contents can go as high as $5,714 in high-risk, coastal areas.

If you are thinking of buying or selling or you just have questions about the process. Please feel frr to contact me at (562) 673-1136

Robert Vaughan
Vice President
Affinity Lending Group
www.Shortrefiusa.com

Is the mortgage market starting to heal???

NEW YORK (CNNMoney.com) -- The mortgage market may have begun to turn: Fewer borrowers fell behind on their payments during the last three months of 2009.

A seasonally adjusted 9.47% of all mortgage loans were late during the fourth quarter, down from 9.64% at the end of September, according to the National Delinquency Survey, which is produced by the Mortgage Bankers Association and is considered the bible of the industry.


This figure is significant because it shows a reduction -- even if just slight -- in the volume of loans heading toward the foreclosure process. This has not happened since 2006.

"We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007, continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting that supported that overbuilding, and culminated with a recession that saw 8.5 million people lose their jobs," said Jay Brinkmann, the MBA's chief economist.

Of course, delinquency rates were still 1.59% higher than they were in the last quarter of 2008.

Foreclosures: Where does your state rank?
Brinkmann's main reason for optimism was a drop in the percentage of borrowers who had missed one mortgage payment. That rate fell quarter-over-quarter to 3.63% from 3.79%.

"The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight," he said. "We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors."

Another positive sign is a drop in the percentage of borrowers whose lenders had initiated foreclosures, the first step in the process of taking homes away from borrowers. That may be only temporary, though: Lenders have been holding back and the number of seriously delinquent loans not in foreclosure has ballooned.

As a result, loans 90-days late or more now account for half of all delinquencies calculated by the MBA, a record high and twice the category's share of delinquencies two years ago.

Landlord foreclosed. Do you have to go?
"The build-up in the 90-day bucket of loans that could end up in foreclosure should keep foreclosure rates elevated," said Brinkmann.

But the high number of borrowers in that category is also somewhat of a statistical glitch. Loans are remaining there much longer than they did in past years because of government and lender attempts at mortgage modifications.

Of all the delinquency hot spots, Florida is the worst hit with 26% of all mortgages in some kind of trouble.

The worst performing category of loans was subprime adjustable rate mortgages, with more than 42% being 90 days late or in foreclosure. That is nearly four times the rate of default during early 2007, when the mortgage meltdown was heating up.

The MBA report, according to Mike Larson, a real estate analyst for Weiss Research, is a further sign that the housing market is truly stabilizing.

"We're now seeing the next piece of the puzzle fall into place," he said. "Specifically, early stage delinquencies are stabilizing. This is a key sign that housing market conditions are slowly, grudgingly, getting slightly better."

One key trend is that home price declines, a key influence on delinquency rates and, especially, on foreclosures, halted their free-fall in 2009. The average home price in 20 major markets dropped only about 5% during the 12 months ended Nov. 30, according to the S&P/Case-Shiller home price index.

As prices stabilize, fewer mortgage borrowers will plunge underwater, owing more on their mortgage balances than their homes are worth. Homeowners with positive equity in their homes have an asset they can tap during temporary financial strains and are much less likely to fall behind on their mortgages


Thank you for checking out my blog. If you have any questions please dont hesitate to call me direct.

Robert Vaughan
Vice President
Affinity Lending Group
562-673-1136 (c)

More Homeowners Struggling As Option ARMs Reset Higher!!

Mark Koba S.E.


Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages—where both interest and principal payments rise sharply—is already leaving many homeowners struggling to keep a roof over their head.

"It's going to kill off housing," warns Patrick Pulatie, CEO of Loan Fraud Investigations, a predatory lending audit firm. "We have pretty close to 500,000 option ARM payments going higher in California over the next couple of years. The impact of the higher payments will be devastating for homeowners who are having trouble now making ends meet."

Option ARM mortgages, which have been around since 1981 and are aimed primarily for people who had fluctuating incomes, became popular during the housing boom. Terms of the loan usually allowed the borrower to make low monthly payments initially—sometimes by just paying interest only.

But as the terms of those mortgages now readjust, homeowners are facing much higher mortgage payments at a time when the value of their house has plummeted and many are out of work. In some cases, homeowners who chose a very low starting interest rate have actually seen the overall amount of their mortgage increase—known as negative amoritization—putting them even deeper in debt.

"Option ARMs have been a disaster from day one and a lot of them have already defaulted," says Greg McBride, senior financial analyst with Bankrate.com. "This is a very big issue because interest rates are rising." Reduce your principle balance with Affinity Lending Group Shortrefiusa.com


There are no specific numbers on how many option ARM loans there are. But analysts estimate that as many as 1.3 million borrowers took out $389 billion in option ARMs in 2004 and 2005 alone.

Many of those option ARM loans have already re-adjusted to higher payments, but more are on the way. Some 88 percent of Option ARMs originated between 2004 and 2007 are going to adjust higher between now and 2012. Those option ARM borrowers could see their housing bills go up as much as 63 percent, according to Fitch ratings.

And there's more misery. If the Fed increases rates in the months ahead to fight inflation, rates tied to option ARM indexes will rise further—causing more payments to adjust up even sooner. And while Option ARM borrowers might want to re-finance, they often can't because of falling home values and tighter credit restrictions.

"I don’t see how the option ARM problem is not a huge issue," says Sylvia Alayon, vice president and director of operations for the Consumer Mortgage Audit Center, which provides auditing services to advocacy groups. "This is a major hit for housing. It will continue to feed the excess supply of housing with more foreclosures."

But Mark Zandi, chief economist at Moody's, says the option ARM problem is just one of many for housing.

"It's more of a bump in the road," Zandi says. "Many of these loans defaulted before they even got to higher payments. "I think the jobless situation is hurting more and the increase in interest rates. Add that with the coming ending of the home buyer tax credit and those are the bigger problems facing housing."

And David Adamo, ceo of mortgage banking firm Luxury Mortgage, says lenders are helping to ease the situation.

"Many of the good ones are entering into agreements to help borrowers ease their payments," says Adamo. "I don’t think that the re-casting of option ARMs will have any greater effect on housing than any other troubles facing borrowers."

In fact, some 21,000 home loans modified in the third quarter of 2009 included a principal reduction or deferral, according to Mortgage Metrics.

But that's not nearly enough says Loan Fraud Investigations Pulatie and getting most lenders to help now is not that easy. He also says they were part of the problem from the beginning. "They were pushing option ARMs. Anytime they sold to Wall Street, they received 3-4 points in commission," Pulatie said. "If you have $500,000 loan you’re talking about $15,000 in your pocket. That's why Wall Street liked them."

As for borrowers, Adamo says they need to do some honest personal appraisals when applying for a loan. "A lot of option ARM loans should not have been made in the first place, " Adamo says. "Many of them had lower stated income levels than should have been listed. Both the lenders and borrowers are at fault for that."

As the option ARM implosion hits housing, solutions seem few and far between. Homeowners are advised to work with their lenders in reducing loans payments if they are behind or can't re-finance. The White House has been increasing pressure on banks to help borrowers, but it's still up to the banks to decide if they will.

And there is HARP, the government program designed to help homeowners refinance an existing mortgage with lower mortgage rate or to refinance to lower monthly payments. But this too has had limited effect with tough restrictions and qualifiers.
Affinity Lending Group is one of the leaders offering shortpay refinancing. Please view this testimonial of a California couple that refinanced through Affinity Lending Group http://www.youtube.com/watch?v=WY7MToO1fdM


While the number of foreclosures has slowed somewhat, it could reach 4 million in the US in 2010 according to RealtyTrac. Numbers like that, says one analyst, mean housing needs a major financial overhaul.

"We need to have these option ARM loans modified and help homeowners pay them off," says Alayon. "People who say 'don't help my neighbor because I made my payments' are missing the point. Missed mortgage payments mean foreclosures and falling home values. This effects us all."

Hi, and Thank for your continued support. If you have any questions or are just curious at what the banks are doing for solutions to this mortgage crisis. Please contact me at 562-685-8159

Thank you
Robert Vaughan
Vice President
Affinity Lending Group

Could FHA raise 3.5% minimum downpayment to 5%???

Homebuyers getting FHA loans too easily

While most lenders have tightened standards for down payments — usually requiring at least 10% down and 20% for the best rates — the Federal Housing Administration has continued to offer loans to borrowers putting down as little as 3.5%. On Thursday the House Financial Services Committee is considering whether to boost the minimum down payment requirement to 5%.

I think the move is overdue, especially since FHA mortgage defaults are at a record high and the agency's reserve fund is at a record low. As a soon-to-be homebuyer myself, I appreciate how hard it is to save money for a down payment. And I recognize that increasing the down payment requirement from 3.5% to 5% will mean that some people may have to put off home ownership in order to save a bit longer. What I don't realize is what's so wrong with that. Getting a home for 5% down is still pretty good deal in my book.

On a $178,000 home (the median in the third quarter, according to the National Association of Realtors), the down payment under the new rules would increase $2,670, from $6,230 to $8,900. That's no small sum, but in the grand scheme of purchasing a home it's not wildly unrealistic, especially for first-time homebuyers (more than half of whom use FHA loans) who will get an $8,000 housewarming gift from the federal government courtesy of the first-time homebuyer tax credit.

One lesson of the foreclosure crisis is that buyers with little of their own cash invested in their homes are more likely to walk away from them, and critics are already making comparisons between the FHA and subprime lenders. Increasing down payment requirements is one way the FHA could prove them wrong.

If you have any questions about what the banks are doing for payment solutions to your mortgage please contact me if you need any assistance.

Robert Vaughan
Affinity Lending Group
www.shortrefiusa.com

Frustrations Rises over Mortgage Relief Program!!

After months of dead ends, rejections and runarounds from bank representatives, Dan Binder is still in loan modification limbo.

When Binder lost his job as a media researcher, he and his wife left their southern California home in July 2008 and relocated to North Carolina where he found a new job in the media business.

Since then, he’s never missed a payment on the three-bedroom home in Riverside County, Calif., he said, though it's lost about half its value since he bought it in 2005 for $418,000. When his wife lost her job after the move, he called his lender, Wells Fargo, to see if the bank could rewrite the loan to lower the monthly payments. Short Payoff Refinance

Since then, he said, he’s gotten conflicting responses from multiple bank representatives, one of whom said he was days away from a new loan that was subsequently rejected.

At one point, after assurances that he submitted all the appropriate paperwork, he was told a form was missing. When he provided it, he was told the remaining paperwork was more than 30 days old and he would have to update and resubmit each document. At another point, he said, he was told his file showed a sizable credit card debt he didn’t owe.

After his latest rejection he asked for an explanation.

“They said the notes from the investors (holding the mortgage) said, ‘You spend too much on food,’ ” he said.

If all this sounds familiar, it's because homeowners around the country have been jumping through similar hoops with the same fruitless results.

Nearly two years after the federal government’s first program to slow the relentless rise in the pace of home foreclosures, the latest attempt, known as Making Home Affordable, is turning out to be another painful disappointment for millions of Americans at risk of losing their homes.

Dozens of e-mails from msnbc.com readers report months of futile effort to modify their loans. The list of problems includes misdirected calls, lost paperwork and conflicting advice from multiple representatives for the same lender.

A Wells Fargo spokeswoman said the company can't comment on individual customer's loans due to privacy restrictions. But she said the company is "working with all of its customers who experience hardships and need assistance with their mortgage payments up the point of actual foreclosure sale.” Short Payoff Refinance

“As the government guidelines have changed and as we have gotten more options to help people, there has been some communication confusion that we are working to absolutely get on top of and correct for customers,” she said.

HUD-approved housing counselors — the frontline professionals trying to help borrowers modify mortgages — have expressed frustrations with a variety of roadblocks, bureaucratic snafus and ongoing confusion about the program.

If you need any Advice, Affinity Lending Group is here to help assist you any way we can. Please contact Robert (562)673-1136

Life after the "F" word Foreclosure

After losing their homes, these 4 families thought they'd never recover. They've found it difficult to rent and their credit is wrecked, but life is looking up.

City: Chicago
Price paid: $245,000
Current value: 175,000
Lesson: "My only regret is that ... we signed a contract and then we couldn't fulfill that contract."

Stephanie Thomson's troubles began when her husband Rich, a highly regarded hair designer, became disabled with neuropathy and could no longer work.

The income loss made it impossible for the couple to sustain the payments on their home in a Chicago suburb.

When they bought the house, they took out a hybrid ARM mortgage. The original bill was $1,400 a month. But it went to $1,900 after three years and more than $2,000 after the second reset six months later.

"With my husband unable to work, we could have paid the mortgage without the ARM reset but nothing more," says Stephanie, who tried for months to get help from her lender. (Robert wants to point out tried for months to get help from her lender) If you find yourself in this position please contact Robert Vaughan with Affinity Lending Group at (562) 673-1136

"They told me they would pray for me. That's an exact quote," she says.

The Thomsons decided to stop paying their mortgage last July -- their first time missing a payment. They didn't pay for 10 months, during which time YouWalkAway.com helped guide them through the foreclosure process.

In April, having saved what they would have paid in mortgage, they relocated to Elyria, Ohio, where Stephanie has relatives. Unfortunately, their credit scores had dropped so low that it was difficult to rent -- much less buy -- a new place. So Stephanie's mom bought a house and rents it to them.

"It's less expensive here; we were able to get a larger house in a wonderful neighborhood," she says. "My only regret is that I'm a proud person. We signed a contract and then we couldn't fulfill that contract because of my husband's illness. It was very difficult."

http://www.youtube.com/watch?v=WY7MToO1fdM
Lori DiBacco
Lori and Bill DiBacco

• Big cities: Big changes in foreclosure rates
City: Oceanside, Calif.
Price paid: $610,000
Current value: $550,000
Lesson: "It was so horrible, the worst stress we'd ever been under."
Apparel sales rep Lori DiBacco and her musician husband, Bill, were living a dream life in their five-bed, three-bath home with pool in beautiful Oceanside, Calif. They bought the place in 1994, and they lived well, but not wisely.

"We took great vacations, if we saw something we wanted we bought it," says Lori.

The couple was childless by choice, as they both traveled for work. Then, five years ago, their goddaughter came to live with them. That radically altered everything.

Bill stopped working so someone would be home, which halved the couple's income. Then, there were big expenses for taking care of the child.

"She needed a lot of extra care," Lori says. "We put a lot of money into her education, dropping $50,000 the first year into Sylvan Learning Center for remedial work."

The coup-de-grace happened when Lori injured her back and couldn't work.

They burned through their savings and took out a second loan on the house. Their monthly mortgage bill, about $1,400 when they first bought the house, ballooned to $4,400. They started missing payments; they simply didn't have the money. They went nine months without paying.

"Oh my God, it was so horrible, the worst stress we'd ever been under," Lori says. "It sent my husband over the edge to a nervous breakdown."

By the time they were done, they owed $610,000 on a property that was worth just $550,000 when they did a short sale last year. (This would have been a good shortpay refinance if they kept current on the mortgage payments.
http://www.shortpayrefinanceusa.com/loan_modification_OC.html
Things are much better now. Bill runs a business restoring classic Mustangs, and Lori started a pet concierge business, which arranges everything for the pampered pet. She calls working with animals her dream job.

Their finances are still tattered. They were turned down for several places they tried to rent. They're living in a condo owned by Bill's mom, paying a small rent but fixing the place up. Lori loves the new place; it's in a quiet 55-plus community with very nice neighbors, most of whom have pets.

"We almost divorced many times over the stress of the financial burden and all that entailed," Lori says.
http://www.youtube.com/watch?v=WY7MToO1fdM

City: Carlsbad, Calif.
Price paid: $840,000
Current value: $600,000
Lesson: "Nothing was lost but a big, freaking headache."
This California resident bought his house nine years ago in a gated community within the posh, seaside city of Carlsbad. He took out an adjustable rate mortgage to keep the initial monthly payments affordable, but by this spring his monthly mortgage bill was $5,600.

At the same time, he found himself severely underwater thanks to falling home prices and several cash-out refinances.

The headhunter and motivational speaker couldn't afford that big a payment and realized he wasn't likely to make back nearly a quarter-million dollars in value. He tried for months to work something out with his lender, but he says, "They made me an offer that was unacceptable."

Instead, Nash, who is married with two kids, decided to go through the foreclosure process. He didn't pay the mortgage for 18 months and finally vacated in June. Not having a housing payment during that time kept him from financial ruin since his headhunting business was in a tailspin.

Nash and his family are now living in a $1,900-a-month rented townhouse in the same great neighborhood just a half mile away from their former home. "I downsized about 1,000 square feet to a 1,500-square-foot home," he says. "Hey! It's a lot easier to clean."

He feels like he landed on his feet in just about every way: His kids were able to stay in the same school; he stayed in the same location, which is like living in a beach resort; and he's spending a lot less on housing. "Nothing was lost but a big, freaking headache," he says.

Still, he counts himself lucky that he was able to find the new place. Most large-scale commercial property complexes wouldn't rent to him because his credit was so tattered, but he found a woman who had just lost her job and needed to leave her townhouse on short notice. He had just received a big check for a head-hunting transaction he had just closed so he got the place.
http://www.youtube.com/watch?v=WY7MToO1fdM

If you or anyone you know is facing a hardship, Affinity Lending Group has a mortgage solution. We have a the experience with many banks over the years please contact me if your thinking of selling or you want to save your home from foreclosure. Take care and God Bless.

The credit for this stories goes to Les Christie, CNNMoney.com



Robert Vaughan
Affinity Lending Group
(562) 673-1136

Mortgage Modifications Moving at Snail’s Pace!! Shortpay's Are Up!!

Bank of America, Wells Fargo get low marks on plan to help homeowners

WASHINGTON - The government's $50 billion program to ease the mortgage crisis is helping only a tiny fraction of struggling homeowners, and a list released Tuesday showed which lenders are laggards.

As of July, only 9 percent of eligible borrowers had seen their mortgage payments reduced with modified loans. And the first monthly progress report showed that 10 lenders had not changed a single mortgage.

The report indicated that lenders such as Bank of America Corp. and Wells Fargo and Co. have lagged behind government expectations. Both banks received billions in federal bailout money.

BofA modified just 4 percent of eligible loans, and Wells Fargo 6 percent. Wachovia Corp., which was taken over by Wells Fargo in December, modified only 2 percent.

"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "We expect them to do more."

Wells Fargo says it plans to speed up its efforts, signing up most borrowers for the Obama plan with one phone call and sending customers a trial offer within two days.

If your loan is with Wells Fargo please contact me as soon as possible to see what Shortpay Refinnance Solution will do to your mortgage.

The report is "only part of the story" because the numbers do not reflect an additional 220,000 loans that Wells modified outside the Obama plan this year, a company executive said.

BofA said it would improve its "processes for reaching those in need" and continue working with the Treasury Department to help homeowners who fall outside the program's eligibility requirements.

We have good results with BofA please contact me at the information listed below

Increase in foreclosures
Meanwhile, foreclosures continue to rise. About 1.5 million households received at least one foreclosure-related notice in the first half of this year, according to RealtyTrac Inc.

"There are certainly more foreclosures going on in the country then there are modifications — by a long shot," said Bruce Dorpalen, director of housing counseling at Acorn Housing, a nonprofit housing group. He said his group has intervened to prevent about 500 foreclosure sales in cases where borrowers wanted to be considered for the Obama plan.

A housing counselor told 36-year-old Veronica Cassella she should qualify for a loan modification, but Green Tree Servicing LLC claims she does not. Cassella, who works at a hair and nails salon in Visalia, Calif., has seen her income shrink with the economy from $35,000 to $25,000.

Her husband still works, but their income is not enough to cover the $213,000 mortgage on their home, which has lost roughly half its value.

"My life has been a standstill with these people for at least half the year," Cassella said. Green Tree, which modified 4 percent of eligible loans, did not return calls for comment.

There are 38 companies participating in the government program, and some noticeable holdouts that control 15 percent of outstanding mortgages.

HomEq Servicing, owned by Barclays PLC, and Litton Loan Servicing, owned by Goldman Sachs, have yet to join. Spokesmen for both companies said they plan to do so soon.

Government partly to blame
So far, banks have extended only 400,000 offers among 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000 of those borrowers have enrolled in three-month trials.

But the government is partly to blame for the languid start. The administration rolled out the guidelines gradually this year. Much of the program was not finished until mid-May, and the guidelines were updated again in early July.

The White House maintains it is on track to meet its goal of helping up to 4 million homeowners by 2012. Last week, the administration extracted a verbal promise from the mortgage industry to reach 500,000 borrowers by Nov. 1.

American Home Mortgage Servicing and PNC Financial Services Group Inc. were among the companies that had a zero next to their names on Tuesday's report.

In a statement, American Home Mortgage Servicing explained that it did not join the program until July 22 but had modified nearly 37,000 loans in the first six months of 2009.

David M. Friedman, president and CEO, said executives expect to help 60,000 customers, or about 40 percent of the company's eligible delinquent borrowers.

PNC, which owns National City Bank, began the process in early July.

If you know anyone that is upside down on the mortgage but they are current with there monthly payments call me to see if your lender is participating.

Robert Vaughan
Vice President
Affinity Lending Group
(562)673-1136

U.S. to mortgage firms: Pick up the pace

Pummeled by complaints from borrowers, loan servicers commit to more mortgage modifications. White House wants 500,000 trial mods by Nov. 1.

NEW YORK (CNNMoney.com) -- Loan servicers will "significantly" increase the pace of mortgage modifications under the Obama foreclosure prevention program, the Treasury Department said Tuesday.

The Obama administration wants to see 500,000 trial modifications in place by Nov. 1. Currently, 200,000 are underway.

Officials called executives from 25 servicers participating in the program to Washington Tuesday to discuss improving the 5-month-old plan's implementation.

Both the Obama administration and the industry are feeling mounting pressure from borrowers who say their servicers are not responding to their calls and applications, losing their paperwork or not making decisions.

"[T]oo many homeowners are at risk of foreclosure right now," Treasury Secretary Tim Geithner said in a statement Tuesday. "Today's meeting was an opportunity to identify ways to accelerate the program and bring relief faster."

Announced in February, the loan modification plan allows eligible borrowers who are in or at risk of default to lower their monthly payments to no more than 31% of their pre-tax income through a loan modification. The adjustments are made permanent after the homeowner makes three on-time payments. Homeowners, servicers and mortgage investors receive incentive payments in hopes of increasing participation.

So far, the government has committed $20 billion to the effort and has said it would provide $75 billion overall.

Thank you for checking my blog out. If you or anyone you know have any questions about what the banks are offering in way of Mortgage Solutions. Please contact me at my office (562) 685-8159

Robert Vaughan
Vice President

Are You Eligible??

Are you are among the 7 to 9 million homeowners who may be able to benefit from Making Home Affordable.

HUD SECRETARY DONOVAN ANNOUNCES EXPANDED ELIGIBILITY FOR MAKING HOME AFFORDABLE REFINANCING
Announces eligibility for borrowers up to 125% underwater in Las Vegas with Senate Majority Leader Harry Reid and Congresswoman Dina Titus
WASHINGTON - U.S. Housing and Urban Development Secretary Shaun Donovan today announced an expansion of the Obama Administration's Home Affordable Refinance Program to include participation by borrowers who are current but up to 125 percent underwater on their mortgage. Under authorization provided by the Federal Housing Finance Agency, borrowers whose mortgages are currently owned or guaranteed by Fannie Mae and Freddie Mac will now be allowed to refinance those loans according to the terms of the Home Affordable Refinance program established earlier this year.

Secretary Donovan made the announcement while touring a neighborhood in Las Vegas with Senate Majority Leader Harry Reid (D-NV) and Congresswoman Dina Titus. Las Vegas leads the nation in foreclosures and approximately 67 percent of the current mortgage holders have mortgages that are higher than the worth of their homes.

"I am here in Las Vegas because it is ground zero of the foreclosure crisis," Secretary Donovan said. "I am pleased to join Senator Reid and Congresswoman Titus to make this announcement today, which I believe will make a critical difference in our ability to help many more Americans, particularly those here in Nevada, to stay in their homes. The president's Making Home Affordable plan is already helping far more families than any previous foreclosure initiative and with today's announcement we will extend its reach still further."

"I am pleased Secretary Donovan accepted my invitation to come to Nevada and see firsthand the challenges homeowners here are facing," Senator Reid said. "His announcement that the loan-to-value requirement for the Administration's refinance program has been raised to 125 percent is good news for Nevadans fighting to stay in their homes. The neighborhood we visited today represents the hardships caused by the housing crisis and the hope that is being restored through the neighborhood stabilization program and the Home Affordable refinance program."

"I am pleased to welcome Secretary Donovan to Las Vegas and thank him for coming. This is an opportunity to show him firsthand the magnitude of the foreclosure crisis in Southern Nevada," Congresswoman Titus said. "His announcement that the Making Home Affordable program will be expanded to help those further underwater, something I have advocated for, is welcome news that will help thousands of Nevadans stay in their home. I will continue working with Senator Reid, Secretary Donovan, and the rest of the Administration to find more ways to help the hardest hit areas like Southern Nevada, as every new foreclosure prolongs the housing crisis and hampers our country's ability to move out of the current recession."

"This decision is part of our ongoing efforts to maximize the effectiveness of the Making Home Affordable program and adapt to an ever-changing housing market," said Treasury Secretary Tim Geithner. "By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly. It's a crucial step in our broader efforts to get America's housing market and economy on the path to recovery."

Currently, only those borrowers whose first mortgage does not exceed 105 percent of the current market value of the property are eligible for the Obama Administration's Home Affordable Refinance Program. For example if the property is worth $200,000, the borrower must owe $210,000 or less. Today's announcement will allow more homeowners to become eligible for the program, by increasing the eligibility to 125 percent.

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. In just a few months, more than 200,000 borrowers have received offers for trial loan modifications, tens of thousands of refinances and trial modifications are under way, and informational mailings about the program have been sent to more than one million borrowers who may be eligible.

Donovan toured a neighborhood that has experienced several foreclosures in recent years, negatively impacting the property values of surrounding homes. The neighborhood has been targeted for Clark County's Neighborhood Stabilization Program, which will use funds to purchase and rehab foreclosed homes, provide downpayment and closing cost assistance to those purchasing foreclosed homes, and provide housing counseling to potential buyers.

If you have any questions please contact me. Thank you so much for the continued support.

Robert Vaughan
Vice President
562-673-1136

Making Home Affordable Program allows you to Refi 105% of a homes value!!

So you want to refinance your house, but it's not worth enough for you to get a good loan in the current market? A new Obama administration program is designed to fix that problem for Millions of homeowners.

Through June 2010 borrowers whose loans are owned or guaranteed by Fannie or Freddie may be able to get quick refinance for up to 105% of a homes value. They must be current on their mortgage payments, but administration officials estimate that as many as 5 million homeowners qualify. Refinance are available for borrowers with credit score as low as 620

This is going to create a real opportunity for millions of people to save money on their mortgages or replace an adjustable-rate mortgage with a fixed rate, "Freddie Mac spokesman Brad German said. The impatient can go to http://makinghomeaffordable.gov a federal website that explains the refinance program. For others please contact Robert Vaughan with Affinity Lending Group.

Thank you,

Robert Vaughan
Vice President
Affinity Lending Group

Mortgage Rates Climb!! Dont Miss this Boat!!

Treasury yields on a tear help pull rates higher; 30-year fixed mortgage jumps to 5.95%.

NEW YORK (CNNMoney.com) -- Home mortgage rates jumped in the most recent week, pulled higher by skyrocketing Treasury yields.

The average 30-year fixed rate soared to 5.95% from 5.45% last week, according to a weekly national survey from Bankrate.com.

The 30-year rate is often influenced by the benchmark 10-year bond's yield, which has increased steadily to hover around 4% recently. The yield was 2% just six months ago. Investors worry that this has re-ignited inflation fears and threatens the potential for economic recovery.

In an effort to cap mortgage rates, the Federal Reserve in March revealed a campaign to buy back $300 billion in Treasurys in hopes that it will spark demand and keep yields -- and therefore, mortgage rates -- in check.

Mortgage rates fell as refinancings abounded. But those benefits seem to have worn off, as rates have been on a tear in recent weeks.

Although mortgage rates continue to rise, they remain much lower than last year, when the average 30-year fixed mortgage rate was 6.48%.

Adjustable-rate mortgages: Those rising rates have made it difficult for many homeowners to refinance, but ARMs are an option, the Bankrate report noted.

Adjustable-rate mortgages were higher last week, with the average 1-year ARM rising to 5.16% and the 5-year ARM jumping to 5.49%.

"Bankers say ARMs got a bad rap in the mortgage debacle," the report continued, adding that the riskiest loans in the housing bubble --"subprime, low down payment, interest-only, negative amortizing and stated income" -- tended to be adjustable-rate mortgages.

But the meltdown happened "because those loan features were layered on top of ARMs," the report said, meaning that it was not the adjustable rates that caused people to default. Rather, home buyers put no money down and "exaggerated their earnings when they applied for stated-income loans."

A few months ago, only about 1% of mortgage applications were for ARMs. Last week, it was 3.4%, the report added.

Other rates: The average 15-year fixed rate mortgage jumped to 5.37% from 5.06% the week prior.

The average jumbo 30-year fixed rate ticked up to 6.96% from 6.68%. Loans are considered "jumbo" when they are too large to be purchased or guaranteed by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500). They carry higher rates than smaller "conforming" loans, which do have guarantees.

Have you applied for a loan modification or refinancing under the Obama administration plan? Did you run into roadbloacks or were you able to get a lower monthly payment and avoid foreclosure? We want to hear your experiences. E-mail your story to AffinityLendingGroup@Gmail.com Attn Robert Vaughan


Robert Vaughan
Vice President
(562) 673-1136

URGENT FIRST TIME BUYERS!! ROB HAS GREAT NEWS!!

Home buyer tax credit can be applied to purchase costs

U.S. Dept. of Housing and Urban Development (HUD) Secretary Shaun Donovan
recently announced that the Federal Housing Administration (FHA) will allow home
buyers to apply the administration's new $8,000 first-time home buyer tax credit
toward the purchase costs of a FHA-insured home. The American Recovery and
Reinvestment Act of 2009 offers home buyers a tax credit of up to $8,000 for
purchasing their first home. Families can only access this credit after filing their tax returns with the IRS.

Home buyers using FHA-approved lenders can apply the tax
credit to their down payment in excess of 3.5 percent of appraised value or their
closing costs, which can help achieve a lower interest rate.
Currently, borrowers applying for an FHA-insured mortgage are required to make a
minimum 3.5 percent down payment on the purchase of their home. Current law
does not permit approved lenders to monetize the tax credit to meet the required 3.5
percent minimum down payment, but, under the terms of the announcement,
lenders can now monetize the tax credit for use as additional down payment, or for
other closing costs, which can help achieve a lower interest rate.
First-Time Home Buyer Tax Credit
Frequently Asked Questions About the Home Buyer Tax Credit
The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to
$8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

The following questions and answers provide basic information about the tax credit. Ifyou have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

1. Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home—new or resale—are
eligible for the tax credit. To qualify for the tax credit, a home purchase must
occur on or after January 1, 2009 and before December 1, 2009. For the
purposes of the tax credit, the purchase date is the date when closing occurs
and the title to the property transfers to the home owner.

2. What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a
principal residence during the three-year period prior to the purchase. For
married taxpayers, the law tests the homeownership history of both the home
buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your
spouse has owned a principal residence, neither you nor your spouse qualifies
for the first-time home buyer tax credit. However, unmarried joint purchasers
may allocate the credit amount to any buyer who qualifies as a first-time
buyer, such as may occur if a parent jointly purchases a home with a son or
daughter. Ownership of a vacation home or rental property not used as a
principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a
maximum of $8,000.

4. Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000
for married taxpayers filing a joint return. The tax credit amount is reduced for
buyers with a modified adjusted gross income (MAGI) of more than $75,000
for single taxpayers and $150,000 for married taxpayers filing a joint return.
The phaseout range for the tax credit program is equal to $20,000. That is, the
tax credit amount is reduced to zero for taxpayers with MAGI of more than
$95,000 (single) or $170,000 (married) and is reduced proportionally for
taxpayers with MAGIs between these amounts.

5. What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a
taxpayer must first determine "adjusted gross income" or AGI. AGI is total
income for a year minus certain deductions (known as "adjustments" or
"above-the-line deductions"), but before itemized deductions from Schedule A
or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the
last number on page 1 and first number on page 2 of the form. For Form 1040-
EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of
income including wages, salaries, interest income, dividends and capital gains.
To determine modified adjusted gross income (MAGI), add to AGI certain
amounts of foreign-earned income. See IRS Form 5405 for more details.

6. If my modified adjusted gross income (MAGI) is above the limit, do I
qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are
available for some taxpayers whose MAGI exceeds the phaseout limits.

7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted
gross income of $160,000. The applicable phaseout to qualify for the tax
credit is $150,000, and the couple is $10,000 over this amount. Dividing
$10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5
from 1.0, the result is 0.5. To determine the amount of the partial first-time
home buyer tax credit that is available to this couple, multiply $8,000 by 0.5.
The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified
adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by
$13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65.
When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by
0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Please remember that these examples are intended to provide a general idea of
how the tax credit might be applied in different circumstances. You should
always consult your tax advisor for information relating to your specific
circumstances.

8. How is this home buyer tax credit different from the tax credit that
Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be
repaid. Because it had to be repaid, the previous "credit" was essentially an
interest-free loan. This tax incentive is a true tax credit. However, home
buyers must use the residence as a principal residence for at least three years
or face recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim the tax credit? Do I need to complete a form or
application?
Participating in the tax credit program is easy. You claim the tax credit on
your federal income tax return. Specifically, home buyers should complete
IRS Form 5405 to determine their tax credit amount, and then claim this
amount on Line 69 of their 1040 income tax return. No other applications or
forms are required, and no pre-approval is necessary. However, you will want
to be sure that you qualify for the credit under the income limits and first-time
home buyer tests. Note that you cannot claim the credit on Form 5405 for an
intended purchase for some future date; it must be a completed purchase.

10. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit.
This includes single-family detached homes, attached homes like townhouses
and condominiums, manufactured homes (also known as mobile homes) and
houseboats. The definition of principal residence is identical to the one used to
determine whether you may qualify for the $250,000 / $500,000 capital gain
tax exclusion for principal residences.

11. I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be
claimed even if the taxpayer has little or no federal income tax liability to
offset. Typically this involves the government sending the taxpayer a check
for a portion or even all of the amount of the refundable tax credit.
For example, if a qualified home buyer expected, notwithstanding the tax
credit, federal income tax liability of $5,000 and had tax withholding of
$4,000 for the year, then without the tax credit the taxpayer would owe the
IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the
$8,000 home buyer tax credit. As a result, the taxpayer would receive a check
for $7,000 ($8,000 minus the $1,000 owed).

12. I purchased a home in early 2009 and have already filed to receive the
$7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000
tax credit instead?
Home buyers in this situation may file an amended 2008 tax return with a
1040X form. You should consult with a tax advisor to ensure you file this
return properly.

13. Instead of buying a new home from a home builder, I hired a contractor
to construct a home on a lot that I already own. Do I still qualify for the
tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that
is constructed by the home owner is treated by the tax code as having been
"purchased" on the date the owner first occupies the house. In this situation,
the date of first occupancy must be on or after January 1, 2009 and before
December 1, 2009.
In contrast, for newly-constructed homes bought from a home builder,
eligibility for the tax credit is determined by the settlement date.

14. Can I claim the tax credit if I finance the purchase of my home under a
mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with the MRB home buyer program.
Note that first-time home buyers who purchased a home in 2008 may not
claim the tax credit if they are participating in an MRB program.

15. I live in the District of Columbia. Can I claim both the Washington, D.C.
first-time home buyer credit and this new credit?
No. You can claim only one.

16. I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who
has not owned a principal residence in the previous three years and who meets
the income limits test may claim the tax credit for a qualified home purchase.
The IRS provides a definition of "nonresident alien" in IRS Publication 519.

17. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes.
That means that a taxpayer who owes $8,000 in income taxes and who
receives an $8,000 tax credit would owe nothing to the IRS.
A tax deduction is subtracted from the amount of income that is taxed. Using
the same example, assume the taxpayer is in the 15 percent tax bracket and
owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction,
the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000),
or lowered from $8,000 to $6,800.

18. I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January
1, 2009, you may qualify for a different tax credit. Please consult with your
tax advisor for more information.

19. Is there any way for a home buyer to access the money allocable to the
credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are
permitted to reduce their income tax withholding. Reducing tax withholding
(up to the amount of the credit) will enable the buyer to accumulate cash by
raising his/her take home pay. This money can then be applied to the
downpayment.

Buyers should adjust their withholding amount on their W-4 via their
employer or through their quarterly estimated tax payment. IRS Publication
919 contains rules and guidelines for income tax withholding. Prospective
home buyers should note that if income tax withholding is reduced and the tax
credit qualified purchase does not occur, then the individual would be liable
for repayment to the IRS of income tax and possible interest charges and
penalties.

Further, rule changes made as part of the economic stimulus legislation allow
home buyers to claim the tax credit and participate in a program financed by
tax-exempt bonds. Some state housing finance agencies have introduced
programs that provide short-term credit acceleration loans that may be used to
fund a downpayment. Prospective home buyers should inquire with their state
housing finance agency to determine the availability of such a program in
their community.

The National Council of State Housing Agencies (NCSHA) has compiled a
list of such programs, which can be found here.

20. The Secretary of Housing and Urban Development has announced that
HUD will allow "monetization" of the tax credit. What does that mean?
It means that HUD will allow buyers to apply their anticipated tax credit
toward their home purchase immediately rather than waiting until they file
their 2009 income taxes to receive a refund. These funds may be used for
certain downpayment and closing cost expenses.
Under the guidelines announced by HUD, non-profits and FHA-approved
lenders will be allowed to give home buyers short-term loans of up to $8,000.
The guidelines also allow longer term loans secured by second liens to be used
by government agencies, such as state housing finance agencies, to facilitate
home sales.

Housing finance agencies and other government entities may issue tax credit
loans, the funds of which home buyers may use to satisfy the FHA 3.5%
downpayment requirement.

In addition, approved FHA lenders will also be able to purchase a home
buyer’s anticipated tax credit to pay closing costs and downpayment costs
above the 3.5% downpayment that is required for FHA-insured homes.
More information about the guidelines is available on the NAHB web site.
Read the HUD mortgagee letter (pdf) and an explanation of the FHA
Mortgagee Letter on Tax Credit Monetization (pdf).

21. If I’m qualified for the tax credit and buy a home in 2009, can I apply the
tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home
purchases in 2009 as if the purchase occurred on December 31, 2008. This
means that the 2008 income limit (MAGI) applies and the election accelerates
when the credit can be claimed (tax filing for 2008 returns instead of for 2009
returns). A benefit of this election is that a home buyer in 2009 will know
their 2008 MAGI with certainty, thereby helping the buyer know whether the
income limit will reduce their credit amount.
Taxpayers buying a home who wish to claim it on their 2008 tax return, but
who have already submitted their 2008 return to the IRS, may file an amended
2008 return claiming the tax credit. You should consult with a tax professional
to determine how to arrange this.

22. For a home purchase in 2009, can I choose whether to treat the purchase
as occurring in 2008 or 2009, depending on in which year my credit
amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax
credit amount in 2009 and a larger credit would be available using the 2008
MAGI amounts, then you can choose the year that yields the largest credit
amount.


Robert A Vaughan
Vice President
562-673-1136

Mortgage Rates Jump: Lock in now, or wait???

Grab one now, or hope for lower rates?
Floaters got sunk this week. Anyone who is in the market for a new mortgage, be it a straight-up purchase or refinance, and was letting their rate float in hopes of locking in at a lower rate instead got smacked with a near quarter point rise in the 30-year fixed rate. According to Bankrate’s latest weekly survey (conducted Wednesday morning) the 30-year fixed average was at 5.45%, up from 5.23% That’s the highest level since February, and more than a half point above the 4.9% borrowers in early April could snag.

So what’s a floater to do now? Well, if you’ve lost your betting mojo, lock in and be happy. Yes, happy. Let’s remember that 5.45% is still seriously good. It was only one year ago that the average 30-year fixed rate was 6.1%. And long term, it is all but assured that a 5.45% fixed rate is going to look darn nice. It may take some time before the Fed gives up the fight and has to let rates rise to attract buyers for all the debt we now have to pay off, but it will happen. So while today’s 5.45% is high relative to a month or two ago, it is likely to be one you will boast about in the coming years.

Okay, enough of the long-term perspective. What if you’re still in betting mode and wondering about the next few weeks and months? Well, that’s one big crap shoot. The recent spike has been caused by action in the 10-year Treasury market (the 30-year fixed rate tends to follow movements in the 10-year note.) Late last week the bond market started worrying about inflation and servicing the federal deficit, and one thing led to another and the 10-year Treasury yield shot from 3.4% last Thursday to above 3.7% during trading yesterday (Thursday) before closing lower at 3.67%. Plenty of market watchers are expecting the trend line on the 10-year Treasury to keep moving up. But here’s where it gets interesting: there’s not as clear a picture if a continued rise in the Treasury will automatically cause the 30-year fixed to also rise.

The big wildcard is Ben Bernanke and his merry band at the Federal Reserve. The Fed has been actively buying up long-term Treasuries and mortgage backed securities in an effort to help keep yields low. When rates started rising the past few weeks the Fed signaled it wasn’t too concerned; in fact it seemed to be cheered by the notion that those slightly rising rates were a sign the economy was gaining a bit of strength. But now there’s a sense that the continued rise-capped by the big spike this past Wednesday-could refocus the Fed’s effort to push yields down; it has yet to use up even half the money it has allotted for the buyback programs, so it’s got plenty of gunpowder ready.

That could be good news for rate floaters; assuming the Fed is still worried that rates rising too quickly and too far will put the kibosh on the already anemic credit market recovery, it’s a decent argument to assume the Fed will soon ramp up its repurchases in an effort to push yields back down after their recent spike.

As David Rosenberg, the former Merrill Lynch economist now at Gluskin Sheff noted on Thursday morning:

“It’s one thing to have a Treasury yield backup when mortgage rates are still declining, but that is no longer the case. The yield on the 30-year fixed-rate is already up 20 basis points from the lows; 1-year ARMs have jumped 17bps. This is not what the Fed wants to see.”

Indeed, the recent rate uptick has sent a chill through the still frigid housing markets. According to the Mortgage Bankers Association, mortgage applications dropped 14.2% this week compared to a week prior.

The bet’s yours, floaters: lock in now at what still qualifies as a terrific interest rate, or put your money on the Federal Reserve pushing yields down in the coming weeks. Which way are you leaning?

Thanks for checking out my blog If you know anyone that is facing a Hardship or they have questions about refinance solutions please contact me direct at (562) 673-1136

Robert Vaughan
Vice President
Affinity Lending Group

Washington Reports: $8,000 Tax Credit!!!

Home builders and Realtors cheered in Washington last week when HUD Secretary Shaun Donovan announced that FHA will allow lenders and government agencies to “monetize” the $8,000 federal homebuyer tax credit, providing purchasers with downpayment cash upfront, available at closing, rather than waiting for the IRS to mail them a tax credit check.

Speaking at the mid-year conference of the National Association of Realtors, Donovan said HUD supports “bridge loan” programs designed to help first-time buyers come up with needed cash.

Under the bridge loan concept, an FHA-approved private lender, a state or local housing agency, or an FHA-approved nonprofit organization could advance as much as $8,000 for downpayment and closing costs -- in anticipation of receipt of the $8,000 credit months or weeks down the road.

Sanctioning bridge loans could improve the effectiveness of the federal credit program significantly, said Joe Robson, president of the National Association of Home Builders.

Bill Riley, incoming president of the Washington State Realtors Association, estimates that half of all would-be first-time buyers lack the downpayment resources needed to complete a purchase, and therefore aren't making use of the credit.

Donovan said technical instructions to lenders for the bridge loan program would be provided by FHA shortly.

In the meantime, 10 state housing finance agencies already run credit monetization programs on their own. They include the states of Missouri, Colorado, Delaware, New Jersey, Tennessee, Idaho, Ohio, Pennsylvania, New Mexico and Washington.

Most of the programs provide second liens with no interest charges for a period of months, with the expectation they'll be paid off immediately after the homebuyers receive their IRS credit checks.

In some cases the liens turn into second mortgages with 10 year terms and floating interest rates if the buyers choose not to repay the advance with the tax credit check.

In the wake of Donovan's announcement, major mortgage lenders are likely to gear up their own programs, bringing bridge loans for first time buyers to all 50 states, not just the ten that pioneered the idea.

However, anyone who wants to take advantage of all this needs to move fast. Under the federal tax credit rules set by Congress, purchasers must close no later than November 30 to be eligible. They must not have owned a principal residence at any time during the three years preceding their purchase. Buyers can claim the 2009 credit against their 2008 federal tax returns - they just need to file an amendment - or can wait and file next April.

For a detailed Q&A on the credit program, go to www.federalhousingtaxcredit.com.

Thank you for checking out my blog. If you or anyone you know is facing a hardship and has questions about what soulutions are avavilable for home owners please contact Robert Vaughan Direct (562) 673-1136