Home Affordable Mods Come to FHA

Do you have a FHA mortgage on your home and wish you could participate in the Home Affordable Loan Modification program?

Up until now, you couldn’t…but that’s changed!

Of course you still have to meet the same requirements to get into the program (see our President Obama’s Home Affordable Loan Modification article for more info), but according to Housingwire.com.

A new workout program, FHA-Home Affordable Modification Program (FHA-HAMP), should be operational by August 15, HUD secretary Shaun Donovan said. “Tens of thousands of FHA borrowers will now be able to modify their mortgages in the same manner as so many others who are taking advantage of the Administration’s Making Home Affordable program,” Donovan said in a statement Thursday.

The program permanently reduces the borrower’s monthly payment through a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off.

FHA-HAMP allows lenders to advance funds on the borrower’s behalf, to pay down the loan by up to 30% of the unpaid principal balance and deferring these amounts in a partial claim.
The program calls for a three-month trial period during which borrowers will be expected to make payments of the amount of the future modification. Only once the borrower remains current on all payments under the trial period, the mortgage can be considered for modification.

As part of the HAMP program, FHA said it will pay incentives up to $1,250 to loan servicers that modify FHA-insured loans under the program.

So if you’ve got a hardship and are in default or imminent default, call your servicer after August 15th and see if you’re eligible.

Source: Truth in Foreclosure

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Capital Gains or Cash Flow?

Not so very long ago the rage of the day was investing for capital gains and future appreciation with very little consideration given to cash flow. In fact, many so-called real estate “investors” were more than willing to buy high with the hope of selling even higher while carrying a negative cash flow all the way. Debt was viewed as only a temporary situation likely to be rapidly resolved as soon as the property sold…and properties were selling in record numbers at record prices. Unfortunately, the tide changed (as it is prone to do) and by 2009, the vast majority of “investors” that purchased exclusively with capital gains in mind are now crying the blues. It’s not limited to real estate investors; the stock market dropped by over 50 percent at the low while home prices plummeted by a third.

On the other hand, those investors that invested for cash flow are in a much better position since rents have not experienced such a dramatic decline. They are able to sit out the financial storm while collecting a steady stream of earnings each and every month or even purchasing additional properties via short sales at bargain basement prices. Remember, rentals are not the only way to invest for cash flow; flips, lease and even owner finance all present the potential for cash flow but the basic idea is always the same….make sure you buy low enough to generate cash flow and keep a little “buffer” just for emergencies.

So, is there a time to invest exclusively for capital gains without regard to cash? Perhaps. Like any investment, if you have additional money to burn and can afford to support the property during any downturns it is possible to generate major returns. However, always be aware of the inherent risk of a property unable to “pay for itself” while still generating a profit.

The bigger question is why settle for a high risk endeavor when there are so many short sale properties that are able to generate substantial cash flow for the taking? If you are still stuck in the capital gains only mindset try out these quick tips:

1. Crunch the numbers. We have said it time and time again –know the numbers for each and every property. Buy right and selling is simple but even if faced with a delay, the property is able to generate enough cash flow to pay for itself and put a little extra in your pocket for the trouble. Learn to do the math…

2. Use a “worst case” cash flow example and a “best case” cash flow combined with capital gains scenario.

3. Improve or purchase currently owned properties. Not only are there plenty of properties to chose from but labor is less expensive thanks in part to extremely competitive bids among contractors. Increase the earning potential of properties to enhance long term capital gains while continuing to college cash flow.

4. Don’t be afraid to sell. Cash is still king and another important source of cash flow that can be used to finance or expand your present forms of property.

5. Calculate your cash flow from assets independent from “earned income” or work. It is more important than ever not to risk your entire financial future solely upon your job.


By: Chris McLaughlin
http://www.shortsalesriches.com/




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Warren Buffet on real estate

Warren Buffett says that the economy "hasn't gotten worse" but also hasn't
"gotten much better" over the past three months.  Nonetheless,he doesn't expect
a 'double-dip' recession and sees significant improvement in residential real estate.
Buffett says that based on a number of indicators, including data from Berkshire
Hathaway companies, "we have not bounced -- but we've quit going down."  He also
sees "important" signs of life for housing: "I think we're certainly—we’re through the
worst of it in residential real estate in all probability. And-- and-- and the reason
is we're building a lot fewer houses and we're-- and we're forming households, so that
solves itself over time.  Doesn't do it in a day or a week, but it solves itself.
So we're further on that."

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This is not a public offering. This is not an offer or invitation to sell or a solicitation of any offer to purchase any securities in the United States or any other jurisdiction. Any securities may only be offered or sold, directly or indirectly, in the state or states in which they have been registered or may be offered under an appropriate exemption

$8000 tax credit: boon or bust?

As many as 40 percent of all home buyers this year will qualify for the $8,000 tax credit for first-time home buyers, and it’s on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February. But there’s another problem brewing: can the housing market even function without it? Some Analysts say the credit is directly responsible for several hundred thousand home sales, and the National Association of Realtors wants Congress to expand the program to $15,000 and extend the timeframe at least through next summer.

The price tag on that plan: $50 billion to $100 billion. Skeptics argue that most of the money is going to people who would have bought a home anyway, and that unless it is allowed to expire on schedule in late November, the tax credit is likely to become one more expensive government program that refuses to die. Economists are split on the merits of another round of government help, but as a real estate broker I can say without a doubt that it is one of the few stimulus plans that actually work in getting our economy moving again.

By: Chris McLaughlin

Mortgages down, interest rates up

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending September 11, 2009, including an adjustment for the Labor Day holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 8.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 18.3% compared with the previous week and decreased 18.7% compared with the same week one year earlier. The Refinance Index, also adjusted for the holiday, decreased 7.4% from the previous week and the seasonally adjusted Purchase Index decreased 10.3% to from one week earlier.

The survey also measured interest rates: The average contract interest rate for 30-year fixed-rate mortgages increased to 5.08% from 5.02%, with points decreasing to 0.98 from 1.23 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.41% from 4.45%, with points decreasing to 1.12 from 1.13 (including the origination fee) for 80% LTV loans. The average contract interest rate for one-year ARMs decreased to 6.61% from 6.69%, with points increasing to 0.20 from 0.19 (including the origination fee) for 80% LTV loans.

By: Chris McLaughlin