The Massachusetts Mortgage Blog

News, Information and Insight into the Mortgage World By David Gaffin, Greenpark Mortgage

From the MA Housing Announcement dated 04-02-2012: 

“Fannie Mae has made changes to their DU Refi Plus in accordance with The Federal Housing Finance Agency announcement of changes to Home Affordable Refinance Program “HARP”. DU Refi Plus is a Fannie Mae no cash out refinance program offering reduced verification and documentation. MassHousing is making DU Refi Plus available on May 1, 2012 to existing MassHousing borrowers who have a conventional first mortgage owned by Fannie Mae on or before June 1, 2009.”

The MA Housing relief program will offer some advantages that other DU REFI PLUS investors will not offer.  Although an appraisal is required, there is no Max loan to value.  So even if the value of your home has fallen by 50%, (which unfortunately, I have seen), you would still be eligible to refinance.

Your mortgage insurance rate would transfer to the new loan, but if your loan balance is lower than the original loan balance, your monthly mortgage insurance payment will be lower.

You can roll in your closing costs, pre-paid and escrow items into the loan if you are short of cash.

Rates have not yet been released, but traditionally, MA housing offers very competitive rates.

If you would like more information, please contact me at or 508-254-2645.




I went to the top for this guest post and asked the co-owner of Greenpark Mortgage for his thoughts on where rates may be headed and why for 2012.  Below are his thoughts:

Given the drop in mortgage rates to historic lows over the past several months, consumers are wondering if now is the time to refinance or perhaps purchase a new home.  Additionally, they are concerned about the lending process and credit guidelines.

Below are my thoughts on where rates may be heading and what to expect when applying for a loan.

We are in uncharted territory with mortgage interest rates. There is a likelihood rates might drop lower in the near-term as the Federal Government continues to buy mortgage backed securities, but buyers shouldn’t count on that and would be smart to refinance or buy now.

I believe there are three keys to the direction of the economy, real estate, and by extension, rates:

  • Employment: If we see two consecutive months of non-farm payroll growth of more than 300,000 then rates will go up. The January report for growth of  non- farm payroll was a positive 240,000. The February number will be released March 9th, 2012. This non-farm number is usually released on the first Friday of each calendar month, but some months there is not enough time to calculate accurate data and the report is pushed back. It reports on the previous month’s figures and there are revisions to prior months.
  • Easy Money: In my opinion, the Fed’s actions have created a lot of pent up inflation pressure, and like a spring being wound, this pressure will be released quickly once the employment picture improves. Sovereign governments have also released trillions of dollars into the monetary systems worldwide and all of this money is sloshing around, waiting for a spark.
  • Housing: There is currently a glut of housing. The glut is actually worse than the numbers might show because of shadow inventory. Banks have millions of properties they should have foreclosed on but haven’t because they don’t want to pay to manage and upkeep the properties. The way that banks deal with this “Shadow Inventory” could have a negative effect on home prices. If too much of this inventory is released too quickly, then there will be an oversupply of housing inventory. Over the last year, the marketing time to list, market and sell a home has improved. This is positive for housing.

Bottom line: I believe that in the near term rates will remain low or even drop a bit but longer-term, as the economy continues to improve, rates will go up, potentially dramatically.

Getting a Loan

I look at the mortgage qualification environment like a pendulum that swings from too lenient to too conservative based on recent trends regarding the delinquency of mortgage payments. This pendulum will swing from +10 to -10 where +10 signifies easy money and -10 signifies tight lending conditions. Seven years ago the pendulum was pointing towards +15. The pendulum had gone off the charts!! Banks were handing out money. Today, the number is at -4. I think the conditions are a bit too tight, but not far off from where they should be. Unlike the boom days, lenders are now carefully examining employment history, income, credit scores, past mortgage payments, and savings. They are also relying on credible appraisals to determine values.

To get a loan today, you have to show banks you can afford to pay the monthly payments. Be prepared to have the proper documentation.

MBS Market Improving

Getting more technical, all of this means the Mortgage Backed Securities market is improving, and that may be the hidden story of 2012. The industry must create quality loans and securities that will bring investors and sovereign governments back to invest in mortgage backed securities. Tighter control on underwriting means better mortgages with more predictable and lower rates of delinquencies and defaults. This is backed up by statistics, which show that the vintage of 2008 – 2012 loans have the highest quality seen in years. That means investors will eventually come in as buyers, replacing the US government and allowing for more growth in the secondary market. Will the pendulum ever get back to a 15 level where credit is too easy and abundant? We hope Never Again, because all that did was to create a huge bubble in real estate that nearly brought the world to its knees. It’s possible that underwriting might loosen a bit more as this process accelerates and the government exits the market.

Overall, I am cautiously optimistic about real estate as an asset class. I believe that an improving economy led by lower unemployment, low to moderately increasing mortgage rates, and the work-down of the real estate inventory glut will largely cancel each others’ effects, resulting in stable, if not slightly increasing real estate values.

I would like to thank Paul for offering his insights on the current rate market and where they may be headed.  Now you can see why I work at Greenpark Mortgage.  In addtion to world class local processing and underwriting, management and ownership have their pulse on the market and have been able to proactively adjust to the many changes that have been occuring in the industry for the past half-decade.

I would add that until Europe get it’s house in order, there will be rate repression as the flight to safety of US Treasuries and the MBS market will continue.  If by some miracle, the European Central Bank and the 17 nation European Union can save Greece, Portugal, Italy, Spain and others, and the US economy continues to improve, we will see rates rise even more dramatically than Paul proposes.

Should  you have any questions regarding the vast array of products that we offer, please contact me at, or call me on my office or mobile at 781-726-6095 x157 or 508-254-2645 respectively.

As always, thank you for reading and I would welcome your thoughts and comments.


With 2011 now behind us, real estate agents and others related to the housing industry are hoping that 2012 will bring a significant improvement to the number of units sold and at least stabilization, if not an increase in the median sales price. 

2011 ended with a nice up-tick in sales according to the National Association of Realtors. However sales remain depressed, as are several of the realtors I spoke with in the Metrowest and Central Mass areas.  Central Mass, in particular, seems to have borne the brunt of the home sales price reductions and sales lag.  Unit sales within the 128 belt have held up nicely, although many homes have experienced a 5-10% appraised value drop, year over year.

 Interest rates have held steady at near record lows. 

While this is good news for first-time homebuyers and relocating workers, as home affordability is better than at any time in recent memory, many sellers are frustrated. 

As home prices continue to drop, more sellers are finding themselves with little or no equity in their homes.  This not only makes them reluctant to price their home to market and sell quickly, for many of them, current rules on Loan to Value are making them unable to take advantage of today’s low interest rates and refinance. 

So what will 2012 bring?  A slight improvement in unit sales, and perhaps a bottom in home prices (I hope!).  Here are my reasons for this conclusion: 

  1. Job creation – Over the past several months, it appears that the job market is improving.  The Massachusetts unemployment rate dropped to 6.8% in December.   This is the lowest level since December 2008.  A few key sectors saw increases in hiring, including Manufacturing and Financial Activities.  Whether these jobs are well paying or not remains to be seen.
  2. Continued Low Interest Rates – While we may see an increase in 30 year fixed rates during the next couple of months, as the national economy shows signs of improvement, I do not expect a dramatic rise in rates.  Rates are currently around 4.00% for well-qualified borrowers.  A rise of .50% should not significantly affect sales. (It will, however, affect re-financing opportunities.)
  3. Helping Underwater Homeowners – I think we may see action on this later this year.  One of the significant factors holding back job creation is the inability of qualified workers to get to where the jobs are, due to being stuck in a home loan that exceeds the value of their home.  I believe, although I am probably naïve, that legislation will pass to incent employers to offer relocation packages to help non-executives get out of from under their homes.  There is also talk of a share equity program, whereby homeowners who were given relief would have to share any equity appreciation in their new home with the investor who lost money in their last home.  After all, home prices will rise at some point, right?  Given that this is an election year, and Congress has been completely ineffective, this may wait until 2013.
  4. Homebuilder Sentiment – Nationally, homebuilding company optimism is making a strong recovery.  Locally, several builders I have spoken with think 2012 will be their best year ever.  Prices may be down, but in many cases so are cost of materials and labor.

There are a few other reasons for optimism including an increase in household formation, as well as talk of programs to rent REO properties, which may help reduce vacant homes and stabilize prices. 

For all of us in the housing industry, let’s hope 2012 is an improvement on 2011.  Should you have any questions regarding loan programs or qualifying, please contact me at or can reach me on my cell at 508-254-2645.


Given that rates are at all time lows, many buyer’s have asked me whether first time home buyer’s can qualify for these rates.  So today I want to help buyer’s understand the various programs that are available, what rates might be offered, what down payments they may need and whether mortgage insurance would be required.

I will lay out comparisons for the following widely available programs:  Conventional, FHA, and USDA 30 year fixed rate mortgages.  These are 3 major programs that are offered, however, additional programs such as Mass Housing 0r combining a first and second mortgage to avoid private mortgage insurance may be offered.

  Conventional FHA USDA
Minimum FICO (typical) 640 640 640
Best Rate FICO 740 700 720
Minimum Down Payment 3% 3.50% 0%
Typical Min Down Payment 5% 3.50% 0%
Down Payment from Gift? Borrower must have 5% of own funds to get a gift Yes N/A
Guarantee Fee Required NO 1% 2%
Fee Added to Loan NA YES YES
Mortgage Insurance YES, unless a 2nd mortgage YES YES
Mortgage Insurance Rate Varies by Debt, FICO and Property Type 1.15% Annually .3% Annually
MI Removal Home Equity reaches 80% 5 years and Equity reaches 78% Life of Loan
Seller Contributions 3% of Purchase Price 3% of Purchase Price Unlimted, subject to Appraised Value
Property Location Eligibility NA NA YES
Income Limit Eligibility NA NA YES
Housing Ratio % (typical) 40% 45% 29%
Debt Ratio % (typical) 45% 55% 41%

The chart below shows examples of Conventional, FHA and USDA loans and payments that might be available for a purchase of a $250,000 single family home, assuming a 740 credit score.  A score of 740 will typically get the borrower the best rates. 

Convetional v. FHA v. USDA Conventional FHA USDA
Rate Example 4.125% 3.750% 3.875%
Appraised Value $260,000 $260,000 $260,000
Purchase Price $250,000 $250,000 $250,000
Down Payment % 5% 3.5% 0%
Upfront Fee % 0% 1.0% 2.0%
Upfront Fee $ Added to Base Loan amount $0 $2,500 $5,000
Down Payment $ $12,500 $8,750 $0
Loan Size $237,500 $241,250 $250,000
Principal and Interest Payment 30 year amortization $1,151 $1,117 $1,176
Annual Mortgage Insurance % 0.59% 1.15% 0.30%
Monthly Mortgage Insurance $ $116.77 $231.20 $62.50
Total P, I, MI Payment $1,267.81 $1,348.46 $1,238.09
Allowable Seller Contributions $7,500 $7,500 $10,000
 APR Estimate  5.011%  5.494%  4.524%
*Assumes 740 FICO Score, Single Familly Residence.  Used as example, Closing Costs additional and APR will vary by program.  No points in these examples.

So why the big difference in programs you might ask?

Traditionally, these programs were designed to help different types of borrowers.  Fannie/Freddie loans were designed for most borrowers, who traditionally had at least 10% down payment, many with 20% down and with good credit.  As home prices increased, this left a larger portion of homebuyers, who did not have enough of a down payment.  That is where FHA came in.  FHA and USDA are government backed programs.  USDA was designed to help more rural borrowers that were underserved by Fannie and Freddie.  Now that Fannie and Freddie are backed by the government against losses, more than 50% of all mortgages originated in the US market are government backed.

With the credit crisis and the mortgage meltdown, the lines between these programs have become blurred, as Fannie and Freddie are requiring very high FICO scores to get the best rate and the difference in rate between best FICO and lowest acceptable FICO is startling.  By contrast, FHA and USDA offer only a slight difference in rates between 740 FICOs and 640 scores.

As you can see, each program has benefits and restricitions/costs that make them more advantageous depending on your particular situation.  I would be happy to help you determine which program may be best for your needs.

To determine if you and your property will qualify for USDA loan, please click this link to the USDA:  

You can reach me at or my cell at 508-254-2645.


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