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Mortgage

Does your short sale seller have a legitimate hardship?

There are many recognized hardships that lend to a simple short sale process, but some hardships are seen as less legitimate by banking institutions and slow the process.

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“To be or not to be, that is the question.”

This famous line from Hamlet is possibly one of the most well-known in Shakespeare’s and I often consider this exact question when collecting seller documentation in a short sale transaction. Will the seller cooperate with all of the short sale lender’s requests? Will the bank approve the seller’s hardship? Is the hardship legitimate in the eyes of the short sale lender?

Short Sale Hardships

There are several common hardships that allow for fairly easy short sale processing at most of the major lending institutions. These hardships include job loss, decrease in hours, decrease in wages, illness, divorce, death, military deployment, and incarceration.

However, there are other hardships that make me wonder whether the short sale is meant to be. Often times sellers receive a job transfer to another part of the state or the country, and are forced to sell their home despite the fact that it is the wrong time and they are still current on payments. Other sellers want to unload an investment property because the rent does not cover the investment’s monthly expenses. A third faction includes families that want to upsize or downsize. And, a fourth group includes those who just want to bail because they cannot see the light at the end of the tunnel.

Depending upon the lending institution and also depending upon the noteholder (investor) that owns the note for a particular loan, there may be certain investor guidelines that would impact whether the short sale is approved. Some investors may consider the hardship very seriously, and others may regulate commission and other fees associated with the sale (such as HOA dues, pest control, and settlement expenses, etc.).

With respect to hardship, however, the good news is that the new HAFA guidelines and the new 30-day short sale review requirement (both of which became effective on June 1, 2012) may mean that a whole lot more short sales are possibly meant ‘to be.’

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

Mortgage

Mortgage application volume falls 8.1 percent in one week

Mortgage application volume fell last week, even accounting for the federal holiday, as certain interest rates jumped up a bit in the same period.

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Mortgage application volume took a dip last week

According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 25, 2013, mortgage application volume fell 8.1 percent from the week prior, including adjustments to account for the federal holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 17 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week.

The seasonally adjusted Purchase Index decreased two percent from one week earlier. The unadjusted Purchase Index decreased six percent compared with the previous week, but was two percent higher than the same week one year ago.

The refinance share of the mortgage application volume fell to 79 percent of total applications from 82 percent the previous week, continuing to hover around 80 percent where it has been for years. The adjustable-rate mortgage (ARM) share of activity increased to 4 percent of total applications. The HARP share of refinance applications increased to 26 percent from 25 percent the prior week.

The MBA reports, “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 3.67 percent, the highest level since September 2012, from 3.62 percent, with points decreasing to 0.42 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The contract interest rate for 30-year fixed mortgages has increased for six of the last seven weeks. The effective rate increased from last week.”

Current average contract interest rates

According to the MBA:

  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 3.95 percent from 3.85 percent, with points increasing to 0.39 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.48 percent from 3.40 percent, with points decreasing to 0.33 from 0.53 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 2.95 percent from 2.87 percent, with points decreasing to 0.38 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 2.60 percent from 2.61 percent, with points increasing to 0.33 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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Mortgage

Mortgage application volume surges in second week of 2013

Mortgage application volume in the second week of the year jumped, led by new mortgage applications, a healthy sign for housing and buyer interest.

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Mortgage application volume jumps in January

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 11, 2013, mortgage application volume increased 15.2 percent from one week earlier, led by a strong increase in new mortgage applications.

The Market Composite Index increased 15.2 percent on a seasonally adjusted basis from the week prior, and on an unadjusted basis, the Index increased 45 percent during the same period as the Refinance Index increased 15 percent from the previous week.

The seasonally adjusted Purchase Index increased 13 percent from one week earlier to the highest level since April 2011. The unadjusted Purchase Index increased 47 percent compared with the previous week and was 5 percent higher than the same week one year ago.

The refinance share of mortgage activity remained unchanged at 82 percent of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3 percent of total applications.

Current mortgage interest rates

According to the MBA:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) remained unchanged at 3.61 percent, with points decreasing to 0.38 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 3.88 percent from 3.78 percent, with points unchanged at 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.39 percent from 3.35 percent, with points decreasing to 0.58 from 0.69 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 2.88 percent, with points decreasing to 0.27 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 2.66 percent from 2.64 percent, with points decreasing to 0.34 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

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Housing News

Fiscal cliff uncertainty means new low for mortgage rates

While mortgage rates have remained low in recent years, mortgage application volume rose last week as rates hit a new low, resulting from uncertainty over the fiscal cliff, according to the MBA.

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Mortgage rates hit new low, application volume rises

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 7, 2012, mortgage application volume increased 6.2 percent from the previous week, with an 8.0 percent increase in refinance applications and a 1.0 percent increase in new mortgage applications.

“Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics.

“Refinance activity increased,” Fratantoni said in a statement, “with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009. Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year.”

The refinance share of mortgage activity increased to 84 percent of total applications from 82.0 percent the previous week, while the adjustable-rate mortgage (ARM) share of activity remained at 3.0 percent of total applications. The HARP share of refinance applications increased to 29.0 percent from 27.0 percent the prior week.

Current mortgage rates

According to the MBA:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.47 percent, the lowest rate in the history of the survey, from 3.52 percent, with points decreasing to 0.36 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.77 percent from 3.79 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.32 percent, the lowest rate in the history of the survey, from 3.34 percent, with points decreasing to 0.51 from 0.62 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.85 percent, the lowest rate in the history of the survey, from 2.86 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 2.63 percent from 2.62 percent, with points decreasing to 0.34 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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