MARKET UPDATE - FEBRUARY 2010

FANNIE MAE OFFERS ADDITIONAL INCENTIVES TO BUY NOW

Fannie Mae is offering a 3.5% incentive for buyers who purchase and close on a Fannie Mae owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on www.homepath.com that are closed within this period may receive up to 3.5% of the final sales price for:

• Closing costs;
• The purchase of new Whirlpool® appliances by Fannie Mae; or
• A mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%.
To be eligible for this incentive:
• Offers must be accepted on or after January 28, 2010.
• Property sales must close before May 1, 2010
• Buyers must be owner-occupants, investors are excluded.
Content above directly from www.homepath.com.
Geneva Financial, LLC offers HomePath financing. Contact me for additional information.

FHA ANNOUNCES ADDITIONAL REFORM
FHA is in desperation to reduce risk and increase its financial position. FHA recently announced steps it will take to strengthen its reserves and limit risk.

• Up front mortgage insurance premium to be raised to 2.25% from the current 1.75%.
• A minimum 580 credit score will be required of all borrowers to qualify with the minimum down payment of 3.5%. Borrowers with less than a 580 credit score will be required to put down a minimum of 10%. Note: Most lenders now require a 620 credit score, and many have increased the minimum credit score to 640; regardless of down payment.
• Maximum allowable seller paid closing costs reduced from 6% to 3%.
Changes are likely to take effect by the summer of 2010.

FHA WAIVES 90 DAY SEASONING
In aN effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure.
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

• In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.

• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Two appraisals will likely be required on most transactions where the property is resold by a private party within 90 days.
The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. This action should help sell more homes at a faster pace and investors will still be able to flip.

WHO’S GOING TO BUY MORTGAGE BACKED SECURITIES
The cessation of the government program to buy mortgage-backed securities, set to end in a couple of months, will show whether the White House and Federal Reserve have effectively stimulated the lending market to the point that it is now on solid footing.
Keeping mortgage rates at record lows was a major component of the economic strategy during President Obama's first year in office. While it did not garner the kind of headlines that efforts to bail out banks did, the policy did help revitalize home buying in parts of the country and assisted millions of home owners who were able to refinance. – Washington Post
When the Federal Reserve stops buying mortgage backed securities, who is going to step into their place? Without a buyer, interest rates will spike, once again putting a damper on the housing market. 2010 will likely prove to be a very volatile year for interest rates, and the overall housing market.

HOMEBUYER TAX CREDIT ENDS SOON
To take advantage of the homebuyer tax credit, buyers must be under contract by April, 30th, 2010. The home must also close by June 30th, 2010 to qualify.

INTEREST RATE UPDATE
Mortgage Type Interest Rate APR
30 Year Fixed 4.750% 4.885%
15 Year Fixed 4.000% 4.229%

Call today for your individual scenario rate quote.

*Interest rates as of 02/02/10. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time