On September 3, Fannie Mae announced that it was increasing its maximum number of allowable days for a foreclosure sale in 33 states. And, immediately thereafter, Freddie Mac also announced that it is increasing the maximum number of allowable days for foreclosure proceedings in those same 33 states.
Both also announced that the new foreclosure timelines apply to all foreclosure sales completed on or after Aug. 1, 2015.
What does the announcement mean for homeowners facing foreclosure?
Both Fannie Mae and Freddie Mac have servicing guides; these are extremely regimented written policies and procedures that are provided to servicing companies. Fannie Mae and Freddie Mac expect that those companies who service the notes owned by Fannie Mae and Freddie Mac will adhere to those policies and procedures. Essentially, these guides provide a framework for processing of any loans in default.
In the most recent announcements of extended foreclosure timelines, the maximum number of allowable days specifically represents the maximum allowable period between the due date of the last paid installment and the completion of the foreclosure sale. (View the extended timelines here: Fannie Mae and Freddie Mac.)
But, what does this mean for homeowners? Does it mean that those facing foreclosure don’t need to consider their options or prepare an exit strategy?
The truth is that it doesn’t mean much. These announcements have more to do with providing written policy to servicing companies and addressing protocols. State laws with regard to foreclosure have not changed as a result of this announcement and those homeowners facing foreclosure need to have a plan.
Who owns the loan? Look it up:
Not all of these homes have mortgages owned by Fannie Mae or Freddie Mac. If you want to know whether Fannie Mae or Freddie Mac owns your mortgage or that of your client, you can use the loan lookup tools on each of their websites.
According to information available on RealtyTrac, there are currently 814,859 properties in the United States that are in some form of foreclosure (default, auction, or bank-owned). Additionally, RealtyTrac stats show that there are approximately 1,350,000 currently homes available for sale across the nation.
The market has changed a great deal since the height of the recession. These new Fannie Mae and Freddie Mac announcements specifically address processing times, which have always been a concern to defaulted homeowners and the real estate professionals who specialize in the distressed property arena.
Why realtors shouldn’t use the term ‘Starter Home’
(HOMEOWNERSHIP) You see the term in the MLS for fixer uppers, you hear it when Realtors are working with first time buyers. But the term “starter home” shouldn’t be in anyone’s vocabulary. Here’s why.
Collins English Dictionary defines a starter home as a “small, new house which is cheap enough for people who are buying their first home to afford.” You won’t find the phrase too often outside of the real estate industry.
There isn’t much about the etymology of the phrase, but most likely, it’s a marketing ploy to get people to buy into the idea of purchasing another home in a few years.
Grind your gears
Mark Greutman, husband to Lauren Greutman, believes that the term “starter home” should bother people. The phrase implies that you will upgrade later.
Your starter home isn’t good enough for the rest of your life. And not to get into how well Americans have it, what about people who will never be able to afford anything more? Is it an insult to them?
Do you really need two living rooms?
Older generations bought one home and lived in it until they could no longer be independent. In today’s world, we buy a starter home, then upgrade to have more space, to live farther away from our neighbors, to have rooms that are only used once or twice a year, and to make sure you have a 2 or 3 car garage to hold your vehicles and more stuff, some of which isn’t taken out very often.
But consider this: You could pay off your starter home in 15 to 20 years, if you budget right.
You could be out from under a mortgage and have money to travel, send the kids to college, or even retire early. When you think about what led to the financial crisis in 2008, isn’t it better to have a smaller house where you can make the payments than worry about losing your house?
Be content where you are
Realtors are motivated to make sure that they have customers. If people buy one home with the intent to stay, will the market dry up? Probably not, because people move and a new generation will be ready to purchase homes for their own family.
Let’s think about that phrase, “starter home.” It fuels consumerism and discontentment. Don’t call cheaper houses starter homes, but just a home.
On the fence about buying a house? Low interest rates may change your mind
(HOMEOWNERSHIP) It’s understandable to be unsure about buying a house in COVID times, but there are some good reasons to take advantage right now.
If you’re on the fence about buying a house in the time of COVID, perhaps this will change your mind: For the third consecutive week, interest rates are well below 3% across the board.
Fox Business reports current fixed-rate mortgages as staying below 3% this week—like the last two weeks—with 30-year rates sitting at 2.75 percent. 20- and 15-year fixed rates are rating 2.75% and 2.125%, respectively. That’s a heck of a lot lower than rates were this time last year, and while there’s an obvious culprit with egregious downsides to thank, the fact remains that a pyrrhic thanks may indeed be in order.
Even refinancing rates are substantially lower than usual. A fixed 30-year rate is right at three percent, while rates for shorter time frames are consistently holding at below 2.8%. This proves true for the 13th week in a row, so it seems like now—like 12 weeks ago—is a good time to refinance your home for a lower rate.
While these rates may differ from what you’ll receive when looking to buy, you can generally expect lower interest rates these days—even if your credit isn’t perfect. Other factors that will impact your rate include property location and value, your income, and how much you’re able to afford for the down payment. Similarly, as long as the economy is going through a rough patch, it seems fair to expect that rates will continue to err on the side of lower than average.
As someone with an interest rate over 4% on a 30-year fixed-rate mortgage, it’s tempting to refinance, especially given that the process for doing so is necessarily contact-free. Even if you’re fully buying a house, though, there’s some merit to entering the market now.
It’s no secret that the economy has slowed down during the pandemic. With the majority of the population hunkering down and sheltering in place, buying a home may not be the first thing that comes to mind for most. Sure, it’s a process that is rife with risk at the moment; however, if your plans for this year included moving anyway, now is a pretty good time to apply.
Getting a mortgage in 2020, what’s changed?
(HOMEOWNERSHIP) In this unexpected marketplace, here’s some advice on how to get a mortgage in 2020.
Mortgages are terrifying. The idea of being committed to a payment for the next 30 years is a viscerally horrifying concept—which makes it a perfect topic to visit this season. Here is what you need to know about applying for a mortgage in the tail end of 2020.
Firstly, it’s important to understand that while mortgage rates are currently low—the last 3 weeks have seen interest rates dip well below three percent—that doesn’t mean you can expect the lowest possible rate. There are a lot of factors that play into the mortgage rate you receive: Credit, location, estimated value, and even your occupation. For this reason, you should evaluate your own eligibility so you know how “safe” you are before calling your bank.
You should also know that your credit history—while always important—will play even more of a role if you plan on buying any time soon. In the absence of other economic factors, lenders are looking much more closely at debt in comparison to income, and some lenders reserve the right to ask applicants to reduce or eliminate sources of debt before granting a loan.
Another aspect of the loan application process involves extremely timely employment checks—some of which may seem invasive. It isn’t out of the ordinary for lenders to vet applicants’ job stability, including whether or not the job will subject workers to increased risk of contracting COVID; for now, at least, a higher-risk opportunity for you might lead to a more tenuous standing in lenders’ eyes.
Finally, most experts in the loan field agree that helping your loan service help you is a crucial aspect of getting information quickly and accurately—something that is of paramount importance these days. The best way to do this is simply for you to be available to the best of your ability; the quicker you can respond with the necessary information, the faster your selected lender will be able to move you through the application process and get you a quote.
Everything feels uncertain right now, and the real estate field isn’t exempt from that feeling. By following the information here, you can cut back on your own uncertainty—and, in the process, potentially score a decent rate on a mortgage.
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