DOCUMENTATION OF GIFT FUNDS

The proper documentation of gift funds is critical to your loan transaction. The mortgage industry places a great deal of emphasis on establishing a formal paper trail of the gift (otherwise known as source of funds) so it is very important that you review and fully understand the requirements presented below. Furthermore, gift funds must be received from a relative, not a friend or acquaintance. There may be times when a close family friend or fiancé is allowed to provide a gift so please be sure to discuss this with your loan officer if applicable. Please note that the required documentation will differ depending on whether you have already received the gift or will receive the gift at a future date prior to settlement.  Gift Funds Yet To Be Received: 1. Provide executed gift letter. If you have applied for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower’s signature. 2. The gift must be in the form of a cashier’s check or certified check. The donor’s name must be printed on the check (example – Donor: John Doe). A Cashier’s check is preferred. None of the gift money can be received in cash from the gift donor.3. Make a copy of the gift check prior to the deposit and also a copy of the deposit slip showing that the funds have been deposited into your account.. FHA ONLY – Donor’s ability must be verified by receipt of a copy of their most recent bank statement.  Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds thru and unsecured loan.  Gift Funds Already Received:1. Provide executed gift letter. If you are applying for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower’s signature.2. Provide, from the gift donor, a copy of the front and back of the canceled gift check or a copy of the gift donor’s full bank statement evidencing the withdrawal amount matching the actual gift amount.3. Make a copy of the gift check prior to the deposit and also a copy of the deposit slip showing that the funds have been deposited into your account. Within three weeks of settlement, please send us a full copy of your bank statement showing the gift deposit. If it is unlikely that you will receive your statement in time please provide a letter from your bank (on bank letterhead and signed by bank official) stating the following: - deposit amount – account number- deposit date – new account balance amount4. FHA ONLY – Donor’s ability must be verified by receipt of a copy of their most recent bank statement. Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds thru and unsecured loan 

The lenders are now requiring a 640 score for all FHA loans effective 11-9-10.  When is the tightening ever going to stop?  We wish we knew the answer to that but now is more imperitive than ever to deal with a trusted loan officer.  Call or email me with your scenario.  I have been doing this when times were easier on everyone and have also had the experience of dealing with the tightening of the lending environment.  Everything is a challenge these days so deal with someone willing to accept the challenge and help.

Jasonbialek@atlanticbay.com

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·         JANUARY 19, 2010, 7:38 P.M. ET

By NICK TIMIRAOS

The Federal Housing Administration will announce more stringent lending requirements on Wednesday to cushion against rising defaults and to stave off the need for a possible taxpayer bailout.

The FHA, which has taken on a major role in the housing market during the economic downturn, doesn’t lend money to home buyers, but insures lenders against default on loans that meet FHA criteria. In exchange for that backing, borrowers who take out FHA-backed loans must pay an upfront insurance premium, which is currently set at 1.75% of the total loan amount, or $1,750 on a $100,000 loan.

The FHA is set to raise that fee to 2.25%, the second increase in the last two years, according to people familiar with the matter. If the larger upfront fee had been in place last year, the FHA would have boosted its reserves by more than $1 billion. The value of those reserves, after projected losses, has fallen to $3.5 billion. Also to boost the reserve, the FHA also will ask Congress to increase a separate insurance fee that borrowers pay annually, people said.

FHA officials declined to comment.

The FHA, which backs up to half of all new loans in certain housing markets, has come under fire for insuring loans with little or no money down as home prices plunged over the past three years, and its reserves have fallen to razor thin levels. That is forcing the agency to walk a tightrope between protecting taxpayer dollars and helping to facilitate the housing recovery.

The FHA will keep minimum down payments at the current 3.5% level for most borrowers. But the agency will require riskier borrowers with credit scores below 580 to make a minimum 10% down payment. While the FHA doesn’t have a credit score cutoff, most lenders require a minimum 620 credit score.

Some housing analysts have pushed for higher down payments on FHA-backed loans, and a bill in Congress would raise down payments to 5%, from the current 3.5%.

Instead, the FHA will reduce the amount of money that sellers can kick in for closing costs, to 3% of the sale price, down from the current level of 6%. The higher cap led to abuses where sellers “heavily marked up the purchase price,” says Lou Barnes, a mortgage banker in Boulder, Colo.

The FHA is also set to announce a series of measures to boost its ability to oversee and take action against lenders that originate loans with FHA backing.

“Mortgage lenders will find the new rules painful but necessary,” says Howard Glaser, an industry consultant. He says the rules were overdue given that “an ‘anything goes’ environment” had prevailed in recent years as former subprime brokers migrated into FHA-backed loans.

**********************************

Howard Glaser

hglaser@glasergroup.net

(202) 277-2336

Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

By Dina ElBoghdady
Washington Post Staff Writer
Thursday, October 29, 2009

The Senate has reached a broad bipartisan consensus on extending a lucrative tax credit for first-time home buyers beyond the Nov. 30 deadline and expanding it to include some current homeowners, according to the Senate’s Democratic leader.

Under the plan, people buying their first home would receive an $8,000 tax credit if they sign a contract by April 30 and close on it by June 30, according to people familiar with the proposal who spoke on the condition of anonymity because the timing had not been finalized. Homeowners shopping for a new primary residence would be eligible for a $6,500 tax credit if they owned their home for five consecutive years in the previous eight.

In both cases, individuals who earn more than $125,000 annually and couples who earn more than $250,000 would not be eligible, the office of Senate Majority Leader Harry M. Reid (D-Nev.) said on Wednesday.

Reid and other supporters of the tax credit hope to attach their proposal to an unemployment benefits bill that may reach the Senate floor this week if lingering issues are resolved about whether to also include two unrelated Republican amendments. “We do expect this tax credit plan to be considered as a part of the unemployment bill at some point,” said Regan Lachapelle, a spokeswoman for Reid.

The proposal is the latest of several regarding the tax credit that have been floated in recent days. Reid and others have been trying to cobble together a plan that would appeal to fiscal conservatives who have balked at the cost of the tax refund program and want it to lapse by the end of next month, as scheduled.

On Wednesday, Senate Minority Leader Mitch McConnell (R-Ky.) said there is wide backing for the latest plan among Republicans, saying that “most members” support it and the underlying unemployment measure. But Don Stewart, his spokesman, warned that nothing is a done deal. “Everything is fluid” until there is unanimous agreement on what will reach the Senate floor, Stewart said.

The tax credit was enacted early last year to help jump-start the housing market. Real estate industry officials say it has helped boost sales and clear out a glut of lower-priced homes, including foreclosures, which have helped drag down home prices.

But the program’s staunchest critics, including some economists, argue that most of the people who received the tax credit would have bought homes anyway.

Here’s the latest news on the Homebuyer Tax Credit. 

Senate Close to Deal to Replace $8,000 Homebuyer Tax Credit

By Dawn Kopecki and Ryan J. Donmoyer

Oct. 27 (Bloomberg) — U.S. Senate leaders moved closer to agreement to replace an expiring $8,000 tax credit for first- time homebuyers with a smaller one that expands access to more borrowers, two people familiar with matter said.

The deal would reduce the size of the tax credit to 10 percent of the sale’s price, capped at $7,290. The credit would be available on home purchases that are under contract by April 30. Borrowers would have 60 days more to close the sale. The existing credit is scheduled to end Nov. 30.

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.netDawn Kopecki in Washington at dkopecki@bloomberg.com

Last Updated: October 27, 2009 14:05 EDT

For the past several years the standard jumbo rates (417K and up) in the greater Roanoke VA area has been very high in comparison to loans under the jumbo limit.  What I have seen for the past few years has been about 1.5%-2% higher than a standard rate, so if the rates are at 5% on most programs you would see a jumbo at 6.5%-7%.  Lately I have seen the rates stagnate between 5%-5.5% for most programs.  We are starting to see jumbo pricing improve i have seen the spread narrow to .5%-.75% higher than standard rate.  Last week I was able to price one out at 5.875% this is a great opportunity for those who are buying above the jumbo limit.  High end real esate is priced well below where it was and with very attractive rates with better jumbo pricing.

Interest Rates
When is the Best Time to Lock?

When it comes to mortgage loans and interest rates, it’s never a good idea to gamble. That’s why I typically advise my clients to lock in an interest rate at the earliest opportunity. This is just one step of the standardized system we have put in place to ensure the best possible loan experience for each borrower that we work with.

A mortgage loan cannot be closed without a locked-in rate, and there are three main elements to take into consideration:

• Interest Rate
• Points or fees
• Length of the lock

Locking in a rate does not obligate the borrower to commit to the loan until the loan is actually closed. The lock is merely a security measure designed to eliminate the risk of market volatility throughout the duration of the purchase or refinance transaction. Our standard procedure is to lock in a rate as quickly as possible. My team and I want our clients to know that while interest rates fluctuate daily, most lenders do not want to lose any business because of it. If a significant rally causes interest rates to drop 0.25% or more, we know that we can most likely renegotiate the rate.

By knowing our clients’ needs and working intimately with them to make the right decisions early on, my team and I are proud to say that we have helped them to achieve their home ownership dreams.

Please feel free to contact me by phone at 540.986.0270, ext. 325, or via email at jasonbialek@atlanticbay.com.

Sincerely,

Jason Bialek

Sr. Mortgage Banker

At this moment in the market right now every lender is busier than ever.  It is taking most banks up to 120 days to close a loan.  We are also slower than normal with the influx of loans we are also very thankful for.  However, our turn times are typically between 45-60 days on all loans.  Call me with your scenario we pride ourselves with the service that is second to none!

ENHANCEMENT OF REGULAR REFINANCING LOANS: Section 504 of PublicLaw 110-389 made changes to VA’s regular (“cash-out”) refinancing loans. Effectiveimmediately, the maximum guaranty amount for regular refinancing loans is the same as themaximum guaranty amount for purchase loans. Regular refinancing loans are now available forup to 100 percent of the appraised value of a home, which is an increase from VA’s previous threshold of 90 percent. All other VA program requirements for regular refinancing loans
remain the same.