“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 dgaffin@greenparkmortgage.com or 508-254-2645.

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 dgaffin@greenparkmortgage.com, 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.

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 dgaffin@greenparkmortgage.com.  www.massmortgageblog.com  http://www.greenparkmortgage.com/davidgaffin or can reach me on my cell at 508-254-2645.

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.

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. 

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: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do  

You can reach me at dgaffin@greenparkmortgage.com or my cell at 508-254-2645.

In this vein, I would like to thank Gary Nagle (781)-235-0502 of Corcoran and Havelin Insurance in Wellesley, MA for sending me the following Hurricane Safety and Preparedness list along with the telephone numbers of the major Homeowner Insurance carriers for Massachusetts.

If you do not currently have homeowner’s insurance please do not call today to get any, as the carriers will not write coverage until after the storm passes.

Please use this well and be safe this weekend.

When a Hurricane is Headed Your Way

Careful preparation and planning before a storm arrives will help minimize damage, loss and grief. The following is a short listing of what could be done to prepare yourself and your family during this season.

Pre-Planning:

Obtain information on flood zones and evacuation shelters. in some area, these can be found in your telephone book or online.

• Plan an evacuation route to the nearest shelter or “safe” area and keep a map handy. During emergencies, shelter locations be also be announced on the radio.
• Replenish emergency kits and supplies.
• Secure important documents from possible damage or move to a safe location.
• Develop a list of important phone numbers.
• Develop a plan to secure loose objects around the house; trim branches and trees.
• Ensure that your pets have collars and identification tags.

Prior to the Hurricane:

Secure all loose objects outdoors.

• Secure all windows using plywood.
• Fill your vehicle with fuel.
• Charge all batteries (i.e. phone, lamps, flashlights, radios, etc.)
• Listen to the emergency broadcasts of the storm.
• Be prepared to evacuate with emergency supplies to a predetermined location.

During the Hurricane:

Stay in doors and away from windows. Keep to the center of the building on the ground level.

• Listen to the emergency broadcast on the radio or television.
• Turn off all electrical devices and appliances that are not needed.
• Stay away from coastal waters, rivers, streams or other flooding areas.
• Do not try to cross flooded areas with your vehicle.
• Listen for instructions from emergency officials when the storm is over.

Emergency Supplies and Kits:

First aid kit and personal medications

• Drinking water
• Ice Chest
• Lighter, matches and candles
• Clothing, personal toiletries
• Sleeping bags and blankets
• Portable radio and flashlight
• Extra batteries
• Non-perishable foods
• Manual can opener
• Important documents
• Quiet games, books, or toys for children

Here are the carrier’s phone numbers:

Thank you Gary for this helpful information. I hope that none of my reader’s will have to use the claim process.

If you need Homeowner’s Insurance, please give Gary Nagle a call at 781-235-0502. He is extremely knowledgeable and as he carries many lines of insurance he can analyze and find the best policies and rates for you.

By the way readers, should you be closing on a purchase or refinance after the storm passes and the Feds declare a Federal Disaster Area, be prepared to have a re-inspection of the property before closing. This is considered to be an Act of God and as a result the borrower will be required to pay for any re-inspection fee. These re-inspections range from $125 to $200. You will receive notice from your lender and re-disclosures prior to closing.

I have attached a chart below indicating the new loan limits for 1-4 family residences through 12/31/2011 for some investors.  2012 Loan limits for Fannie and Freddie have yet to be announced.  For Massachusetts this reduction will impact the these areas as follows:  Martha’s Vineyard and Nantucket:  Reduced from $729,750 to $625,500; ,  Essex, Middlesex, Norfolk, Plymouth and Suffolk Counties reduced from $523,750 to $465,750; Bristol county will be reduced to $426,650; Franklin, Hampden, Hampshire and Worcester Counties will remain at $417,000.

Please follow the attached chart for the max loan amounts. It is indicated by county.

                                  1 Family  2 Family   3 Family   4 Family

You can also access other states via the website: http://www.fhfa.gov/Default.aspx?Page=185 and click on the HERA Loan Limits at the bottom of the page.

 With respect to FHA, more pain is ahead as FHA seeks to lower its market share and reduce exposure.  Loan limits decreases will affect Massachusetts dramaticaly, as the chart below indicates:

 Worcester County will get killed!   With Loan Limits dropping by almost $100,000, FHA will be effectively increasing the down payment requirements for buyers, if they wish to purchase a home over $298,000.   This will have an impact on home prices.   FHA is also good for buyers who have less than 740 credit scores.  Fannie has price adjustments for lower Ficos and these raise the interest rates to borrowers.  The towns of Milford, Westborough, Northborough, Shrewbury, Northborough, among others could be hard hit.

Bottom line, Take advantage of the low interest rates and higher loan limits now.  Greenpark is currently accepting purchase loans for the higher limits until 8/25/2011, to close by 9/30/2011.

Please send me an email me,  dgaffin@greenparkmortgage.com   with any questions and thank you for reading.

by Heidi Zizza of MDM Realty on June 13, 2011

in Buying A Home,Homes for Sale,Just For Fun,Real Estate Advice

There are so many firsts in a person’s life. Getting married and buying a dress, having your first child, sending them on a kindergarten bus, the first time one of your kids leaves for college etc…

Well in housing your first time can be just as stressful and nerve wracking. I was asked by my first time buyer clients K.M and C.M to write a little something about this experience and how to handle yourself during this time.  Here are some  tips to keep you cool during this first time process.

1.  If you equate this process (in hypothetical terms) to planning your wedding, PLEASE stop watching “Say Yes to the Dress!” Being overly obsessed with minutia can and will drive you crazy. (Yes K.M. I know you are organized!)

2.  Don’t overload yourselves with too much information from the starting line, you will never remember it all anyway. Be informed but try to focus on each step as it presents itself. Ask your Realtor for an outline of the process and go over it in full during each step of the transaction.

3.  Keep your P’s and Q’s to yourselves. I have said before in other articles that your situation is not the same as anyone else’s. Talk to your mortgage and Real Estate professionals, not friends and family. When you need a tooth pulled, you go to your dentist for a procedure not to your cousin Fred, so keep to those same rules here.

4.  Before you start the fun part of house hunting you really need to sit with a qualified mortgage professional and find out what your financial picture looks like. It’s never a fun time to start looking at houses in the $400,000 range and then find out you are only qualified for $300,000. After that every house you see will be a disappointment.

5.  Find out if your employer is affiliated with any financial institutions that offer employees special first-time home buyer incentives. Although the tax credit is history there are still some first time buyer promotions out there.

6.  Last but not least be organized and diligent with all your banking paperwork (I will not worry about you K.M on this point). This will make for a smoother transaction without untimely and possibly costly delays that can affect both buyers and sellers.

Remember to try to enjoy yourself! Yes, this is a serious process, but have some fun at the same time. You want to look back on the experience as a positive one.

I truly believe there is a house for everyone and when you walk through its door it will let you know! Maybe it will even shout “Say Yes to the Dress!”

Thank you Heidi for the great advice.  Heidi is a true professional who loves to work with First Time Buyers.  If you or someone you know could benefit from her services, Heidi can be reached at mdmrealty@msn.com or 508-879-8999.

If you need your mortgage questions answered, please contact me at dgaffin@greenparkmortgage.com or visit my webpage to apply online:  www.greenparkmortgage.com/dgaffin.

Congress passed additional legislation to extend these loan limits for the past couple of years.  However, barring any Congressional action, the FHA Loan Limits are set to revert to the 2008 formula as of October 1, 2011.  This could have a major impact on FHA availability depending on what state and county you live in.  To quote from the

Potential Changes to FHA Single-Family Loan Limits beginning October 1, 2011 from Implementation of theHousing and Economic Recovery Act of 2008 A Market Analysis Brief

Proposed FHA Loan Limit Changes effective October 1, 2011

MA      Barnstable               $462,500           $405,950            -$56,550       

 MA     Bristol                       $475,000           $426,650            -$48,350 

 MA      Dukes                       $729,750            $625,500            -$104,250

MA      Essex                         $523,750           $465,750              -$58,000

MA      Franklin                   $318,750           $274,850           -$43,900

MA      Hampden                $318,750            $274,850              -$43,900

MA      Hampshire              $318,750            $274,850           -$43,900

MA      Middlesex                $ 523,750           $465,750           -$58,000

MA      Nantucket                $729,750           $625,500           -$104,250

MA      Norfolk                     $523,750            $465,750           -$58,000

MA      Plymouth                 $523,750            $465,750           -$58,000

MA      Suffolk                      $523,750            $465,750           -$58,000

MA     Worcester            $385,000        $285,200        -$99,800



So, is this a big deal?  ABSOLUTELY!!.  FHA is making up a greater percentage of all loans originated as conventional guidelines continue to become more restrictive.  For borrower’s with less than a 5% down payment (the merits of a higher down payment requirement can be argued about), FHA is the main loan program available.  Worcester County, which has been fairly hard hit by the decline in home prices over the past few years will be drastically impacted if borrwer’s who can qualify based on income and employment cannot purchase a home above the new limits.  Homeowner’s in the affected counties will see their home values decline more dramatically, wiping out whatever equity they may have built over the years. The Worcester MA county FHA loan limit is dropping by almost 26%!   There will have to be consequences for these changes and none of them good in the short term for the housing market.

Home affordability is very important to get the housing market out of the quagmire it is in, however, the severity of the potential impact is too great. There will have to be consequences for these changes and none of them good in the short term for the housing market.

My advice for borrower’s needing to refinance into an FHA, becuase you can’t qualify for a conventional or jumbo loan, is to get it done NOW!  Case-Shiller has confirmed a Double Dip in home prices and this trend may continue.  Therefore, in the near term, appraised values for comparable homes may be as high now as they will be for months or years to come.

I would also suggest that homebuyer’s and homeowner’s contact your congressional representative seeking for an extension of the loan limits.  We know Housing Reform is coming for Fannie and Freddie and that is expected to make it even more difficult to get a loan if you are not a perfect borrower, and how many of us are perfect?

Questions and Comments are always appreciated as are subscribing to my blog.  Please see the sign-up on the right side of the page.  Email me at dgaffin@greenparkmortgage.com.

Judy writes:

With all the current inventory on the market, your goal is to make buyers think that your house is their best choice.  And it doesn’t always have to do with new kitchens and baths.

Remember all the little things that annoy you- the leaking faucet, the squeaky door, the broken window pane, etc?  It’s time to address those items because the details are what matter.

You’ve lived with some of these things for years (probably) and have adjusted to them. 

To a buyer they become reasons to not buy your house- or reasons to unjustly discount it!

A leaky faucet to a buyer can mean you need a new faucet when it could actually meanyou just need to replace a washer. 

1. Take An Honest Inventory of Each Room

Take inventory in every room, be honest as you make your list, and call your local handyman or contractor to address the issues.  Why not do it yourself?  You could, but the finished job should not scream “the homeowner fixed this!”.  Plus, your family will be busy undertaking another task which is very personal; the daunting- and rewarding task of de-cluttering. 

2. De-Clutter

You’re moving- start packing!  Clutter distracts buyers and makes rooms look smaller. That collection of penguins needs to be packed away.  Flat surfaces should be cleared off. And most importantly, personal items such as family photos need to be removed.  Let the  buyer visualize their family in the house; with your family photos scattered everywhere, it’s almost impossible for the buyer to mentally move it.    

3. Edit Your Closets

And don’t forget your closets.  Many buyers move due to the need for more space and storage. If your closets are packed, even though your house might offer double the buyers’ current closet space, the perception is that there is not enough room for all their stuff.  Typically closets need to be edited by a minimum of 30%. And that includes kitchen cabinets and drawers as well as linen closets.

A buyer who sees a linen closet perfectly organized with folded towels (a la a well know domestic diva) can only think “these sellers are so organized!” and that is money in YOUR bank. 

4. Home Repair Records

Speaking of organization- pull together all your home maintenance and repair records. How old are the systems?  How old is the roof?  What have you improved since owning the property? What were your utility costs for the last 12 months?  If you can’t remember the last time your heating system was serviced, NOW is the time to do it.  Having this information on hand for the buyers gives them the impression that you took the responsibilities of home ownership seriously and that’s the type of house they want to purchase.  

This small investment of time and money will benefit you in the long run and set your house apart from the competition.

Below are Before pictures of a Living Room that the sellers presented that room as and the After picture with Judy’s staging design showing how a few simple, inexpensive ideas can dramatically alter the room’s feel and appeal.

Judy,  thank you for the sound advice! Guess I would have a LOT of work to do to get my house ready.  If you have any questions, you can reach Judy using the information below.

JUDY B. LEERER, ABR, CRS, GRI, SRES, ASP is a Realtor and Home Stager in Metro West Boston with 27 years of experience working with sellers and buyers. Currently affiliated with Realty Executives Boston West, she offers home staging services as one of her marketing tools to help sellers set their homes apart from the competition. Contact Judy by phone at 508-371-4356, email judy@leererhomes.com or visit her website at www.leererhomes.com.