Real Estate Blog for Southern Arizona

Maximum LTV for Obama Administration’s Refi Program Increases to 125 Percent
On July 1, 2009, Federal House Finance Agency (FHFA) Director James Lockhart joined Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan in announcing a major expansion of the Obama Administration’s Home Affordable Refinance Program for Fannie Mae and Freddie Mac loans. The change will allow current borrowers with loan-to-value (LTV) ratios of more than 80 percent up to 125 percent (formerly 105 percent) to qualify if they meet other program requirements. This significantly expands eligibility for the program which allows borrowers to lock in today’s lower rates or move into a fixed rate product. Higher fees will apply to loans with LTVs above 105 percent, but the program includes lower fees for borrowers who opt for a 20-year or 25-year term, to build equity faster and reduce interest payments over the life of the loan. The easiest way for borrowers to find out if they have a Fannie Mae or Freddie Mac loan is to go to www.MakingHomeAffordable.gov and click on "loan look up."
FHFA Announcement (with Refinancing Example)
Fannie Mae Announcement 09-23
Fannie Mae FAQs
Freddie Mac Press Release

One and ALL: Be prepared for potential delays in closings, this from AAR

 Lenders will be subject to new disclosure requirements for mortgage loans under the Federal Reserve Board Truth in Lending Regulation (Reg Z). The new requirements apply to loan applications filed on or after July 30, 2009 (about two months earlier than originally planned). The new rules are complex and compliance will be a challenge for lenders. REALTORS® will want to learn the basics so they can advise clients of potential delays and the new procedures. Here are key highlights of the changes:

• The new requirements apply to all mortgages secured by a borrower’s home, including primary and second homes and refinancings. Investor loans continue to be exempt.
• Lenders must give good faith estimates of mortgage loan costs within 3 business days after the consumer applies for a loan (early disclosure). The lender may not collect any fees before the disclosure is provided, except for a reasonable fee for obtaining a credit report.
• The closing may not take place until expiration of a 7 day waiting period after the consumer receives the early disclosure.
• Consumers may waive the waiting periods for a “bonafide personal financial emergency.” In the preamble to the final rule, the Fed stated that it “believes waivers should not be used routinely to expedite consummation for reasons of convenience.” The Fed also refused to insulate lenders from liability even though the consumer requests the waiver.
• If the annual percentage rate (APR) changes by more than 0.125 percent, the lender must provide a corrected disclosure to the borrower and wait an additional 3 business days before closing the loan.
  The APR includes not only the interest rate on the loan but certain other costs related to settlement, so it will be important for any fees that affect the APR to be as accurate as possible, as early as possible, to minimize the need for a corrected TILA disclosure.
• The consumer may modify or waive both waiting periods for a documented personal financial emergency, but must receive the disclosures no later than the time of the modification or waiver.

Federal Reserve Board Final Rule and Staff Commentary (Federal Register, May 19, 2009)
Wells Fargo Website with Its Advice on the New TILA Requirements
Mortgage Bankers Association Summary of New Requirements  

Protecting Tenants at Foreclosure Act of 2009

Please see attached PDF:  On May 20, 2009, the legislation referred to as "Protecting Tenants at Foreclosure Act of 2009” came into effect and provides tenants with leases the ability to remain in a foreclosed property at least until the end of the lease, and month-to-month tenants are entitled to 90 days’ notice before having to move, for all federally related loan foreclosures of residential property. An exception was made for the buyer who intends to live in the property who may terminate a lease with a 90 day notice.

Prior to May 20, 2009, most tenants were forced out of the property upon foreclosure. In Arizona, if the loan was recorded before the lease was signed the foreclosure would wipe out the lease.  As of May 20^th, leases survive the foreclosure, therefore allowing the tenant to occupy the property until the end of the lease period and month-to-month tenants are entitled to a 90 notice.  The new rule applies to Section 8 tenants as well.