Mortgage closing costs fell 7% for homebuyers

Federal regulations are helping to significantly reduce the amount new homebuyers are paying come closing time. The average cost of closing on a mortgage has fallen by 7.4% over the past year, according to a recent survey by Bankrate.com. At the end of June, a homebuyer looking to close on a $200,000 mortgage with 20% down paid an average of $3,754, $300 less than 12 months earlier. Included in those costs are origination expenses, such as application fees and the cost of doing credit checks, and third-party fees, such as those paid for title searches and insurance. The decline can be attributed to new regulations that require lenders to be more accurate when estimating closing costs for borrowers, said Greg McBride, Bankrate's senior Financial analyst. The regulation, which was put in place two years ago as part of the Real Estate Settlement Practices Act requires lenders to provide a "good faith estimate" of third-party fees that is within 10% of the actual amount the buyer will pay. "The big drop in third-party fees indicates the lenders are doing a better job at estimating what the costs will be," said McBride. The most expensive state for closing on a home was New York, where total origination fees and closing costs averaged more than $5,400 for a $200,000 mortgage, according to Bankrate. Texas, Pennsylvania and Florida also cost far more than the national average. Missouri was the cheapest, with total borrowing costs averaging just over $3,000. Other states where closing costs remain low include Kansas, Colorado and Iowa, Bank. Even on a neighborhood level closing costs can vary significantly, said McBride. Borrowers can save money by getting at least three estimates and paying close attention to the total costs of obtaining a loan rather than getting seduced "Borrowers don't want to get tunnel vision shopping for the best mortgage deal by only looking at the interest rate," he said. "Closing costs are a big line item and savings there can be quite significant." Buyers If you are waiting to buy a home than now is the best time. With rates at an all time low, lower cost, and more bang for your buck. Call me now and you can be in your new home in time for the holidays. Call Robert Vaughan at (657)229-3314 Sellers with buyers ready to buy and banks willing to work out a short sale now is the time to sell. If you are having trouble making payments we have a mortgage solution just right for your situation but you must call me (949) (657)229-3314 so we may help Thank you Robert Sr. Advisor American First Mortgage Company

Regulators Tell GSEs to Assist Military with Short Sales Both Freddie Mac and Fannie Mae will be offering additional consideration to military personnel who may be facing problems with their mortgage due to service related orders. The two GSEs were directed to address mortgage servicer practices that pose risks to home owning service members and to ensure compliance with applicable consumer laws and regulations. The "guidance" came from regulators the Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation and other regulators. The guidance pertains to risks faced by homeowners who have received Permanent Change of Station (PCS) orders, that is have been ordered by the military to relocate to a new duty station or base. Such orders are received by about one-third of active-duty service members each year. PCS orders are non-negotiable and carry short, strict timelines. Homeowners with such orders, however, are still obligated to honor their financial obligations including their mortgages. In the current environment, with so many homes underwater, these service members may be unable to sell their homes and obtain sufficient funds to pay off the mortgage debt and may have to continue mortgage payments while making rent or other housing payments in their new location. Under the new guidelines, receipt of a PCS will be treated as a hardship for the purpose of qualifying for a short-sale even if the homeowner is current on the existing mortgage. Military with PCS who complete a short sale will be exempt from deficiency judgments from Fannie Mae and Freddie Mac and relieved of any request or requirement to contribute cash to the sales proceeds or to sign a promissory note for any outstanding balance as long as the property was purchased on or before June 30, 2012. In addition to holding PCS order, the homeowner must have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac to be eligible for the program. The status of the mortgage can be current or delinquent. Freddie Mac and Fannie Mae were instructed by regulators last year to treat PCS orders as a hardship for purposes of modifications and forbearance. Paul Mullings, Freddie Mac's Interim Head of Single Family Business and Information Technology said, "Freddie Mac is proud to support this important new effort to help servicemen and women when national duty requires them to sell their homes in an uncertain market. We look forward to working with our servicers on this new short sale policy. Together we can help ease the challenge of relocation for military families when Permanent Change of Station orders are received." The Federal Housing Finance Agency said it would provide final guidance by September 30 and the short-sale reforms would be effective 60 days later. If you have any questions about these programs or you are in the Military and facing foreclosure PLEASE!! Contact Robert Vaughan your Sr. Mortgage Advisor at (657) 229-3314

Bank of America Increases Relocation Assistance Payments to Customers Completing Preapproved Price Short Sales

Short Sales Provide Alternative to Foreclosure for Delinquent Borrowers Who Have Exhausted or Declined Home Retention Solutions

CALABASAS, Calif. – Adding to its foreclosure prevention initiatives, Bank of America has launched a nationwide program that offers delinquent mortgage customers increased assistance with relocation expenses – between $2,500 and $30,000 - at the completion of a qualifying short sale. “Bank of America is committed to providing alternatives to foreclosure whenever possible,” said Bob Hora, home transition services executive for Bank of America. “This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home.” The short sale relocation assistance program builds on the bank’s already robust short sale initiatives, which led to 200,000 completed short sales in the last two years and another 30,000 in the first quarter of 2012. This program is based on a similar incentive offer that Bank of America tested in Florida last year. To qualify for the enhanced relocation assistance payments under the new program, the seller must work proactively with the bank to obtain a preapproved sales price prior to submitting a purchase offer to the bank. A short sale must be initiated by the end of this year and close by September 26, 2013, to be eligible for the payment. Qualifying short sales that have already been started but have not closed may be eligible for the relocation assistance. The amount of assistance provided under the new program will be determined on a case-by-case basis using a calculation that includes the value of the home, amount owed and other considerations. Initially, the program will be offered on mortgages that are owned and serviced by Bank of America. While available nationally, Bank of America anticipates greatest response to the program will come from borrowers in California, Nevada, Arizona, Florida and other states hardest hit by the economic downturn and falling property values. Customers who believe they may be eligible for Bank of America’s short sale relocation assistance program may contact program specialists at 657.229.3314 To help homeowners understand the short sale process and other foreclosure avoidance programs, Bank of America encourages them to contact Robert Vaughan with American First Mortgage Company to answer all your questions and direct you to the best possible solution. Sr. Mortgage Advisor Robert Vaughan 657.229.3314

BofA will Broaden Principal Reductions, Feds will Reduce Penalties

The Wall Street Journal reported this morning that Bank of American (BOA) has struck a side deal with the government that would cut penalties assessed against it in return for making deeper cuts to the mortgages of distressed borrowers.

The recent $25 billion dollar settlement between BOA and four other major lenders and the U.S. Justice Department, federal regulators, and 49 of the states' attorneys general would have obligated BOA to pay as much as $850 million in penalties and to cut the outstanding balance of principal for some borrowers to a maximum of 120 percent loan-to-value. Under the new agreement BOA would cut the outstanding balance down to the market value of the collateral property and is expected to reduce the average mortgage by about $100,000. A BOA spokesman said the final value of the agreement will depend on how many borrowers take up the offer.

On February 9 BOA explained to its investors that its obligations under the multi-bank settlement would total $11.8 billion and include the following:

Approximately $7.6 billion in borrower assistance, including targeted principal reduction.
Approximately $1.0 billion in refinancing assistance to customers in the participating states.
Approximately $2.25 billion in direct payments to state and federal governments and in borrower restitution, of which $1.9 billion would be an upfront cash payment and the remaining $350 million, would be paid only if Bank of America failed to meet certain principal reduction thresholds over a three-year period.
Up to $1.0 billion in payments to settle FHA claims, of which $500 million would be an upfront cash payment, and the remaining $500 million would be paid only if Bank of America fails to meet certain principal forgiveness levels over a three-year period.
The new agreement does not apply to any of the other four banks involved in the original settlement. It would allow BOA to avoid paying $350 million in penalties and the back half of the $1 billion FHA claim referenced above. If, as it appears, the $350 million is the portion of the $2.25 billion which is also structured as a back-end payment it would seem that the bank is being proactive in concluding remaining details of the settlement. Many of the write-downs will be made on loans originated by Countrywide Financial Corp., which Bank of America acquired in 2008, and then packaged into securities. BOA will also reduce balances on loans it owns.

The Journal said that the new arrangement is likely to generate criticism from investors who own the securities backed by the mortgages that would be reduced and fund managers who feel it is unfair for banks which were servicing loans for investors to use those loans to settle problems they themselves caused It quoted one fund director who would not speak directly about the agreement as saying, "To ask investors to pay for banks' fines in any form seems inappropriate and incorrect-we have very serious issues with that."

An Obama administration official however said that principal reductions will be done only when there is a benefit to investors; that is the principal reduction would cost less than a foreclosure, and the reduction would be done in compliance with investor contracts.

States With Highest Foreclosure Rates Among Bank Deal Holdouts

California, New York, Nevada, Florida and Massachusetts are among the handful of states that haven’t signed a deal with banks over foreclosure abuses, according to state officials and two people familiar with the talks.

The holdouts include some with the highest rates of foreclosures. More than 6 percent of Nevada housing units had at least one foreclosure filing in 2011, giving it the nation’s highest foreclosure rate, according to RealtyTrac. California registered the third highest rate in 2011 with one in every 31 units having at least one foreclosure filing during the year, said the firm, which tracks foreclosures.

California Attorney General Kamala Harris and New York Attorney General Eric Schneiderman, who have been some of the most outspoken in pushing for changes to the deal, were among those who hadn’t joined as of yesterday’s deadline. More than 40 states signed on to the accord, according to Iowa Attorney General Tom Miller, who is helping to lead talks with the banks.

“Adding more numbers probably improves the political dimension of the settlement from the standpoint of the attorneys general,” said Ken Scott, a Stanford University law professor. “If you can say there were only a handful of diehards that didn’t sign on, that gives you some political protection.”

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All 50 states announced almost 16 months ago they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes. Officials from a group of state attorneys general offices and federal agencies, including the Justice Department, have since negotiated terms of a proposed settlement with five banks that is said to be worth as much as $25 billion.

Massachusetts Attorney General Martha Coakley and Florida Attorney General Pam Bondi haven’t signed on as of today, said the two people, who declined to be identified because the matter isn’t public. Delaware and Nevada also hadn’t agreed to the settlement as of yesterday, according to their offices.

Miller said federal and state officials continue to discuss the proposed deal and its terms with the banks.

“This enables us to move forward into the very final stages of remaining work,” Miller, a Democrat, said yesterday. He didn’t say which states have signed on and he declined to comment further.

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Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. made a last-minute demand that New York drop claims filed against them Feb. 3 as a condition of the foreclosure settlement, a person familiar with that case said. The push by the three banks raised an obstacle in getting Schneiderman’s support for the deal, said the person.

New York sued Bank of America, JPMorgan and Wells Fargo in state court in Brooklyn, saying their use of a mortgage database known as MERS led to improper foreclosures. Schneiderman said the banks’ use of the Mortgage Electronic Registration Systems database misled homeowners, undermined foreclosure proceedings and created uncertainty about ownership interests in properties.

The banks have asked that many of the claims in the complaint be thrown out, said the person. The other two banks involved in the nationwide settlement proposal, Ally Financial Inc. and Citigroup Inc., weren’t named in the complaint.

Dani Lever, a spokeswoman for Schneiderman, declined to comment on the demand by the banks over the MERS lawsuit.

Bank Spokesmen

Mark Rodgers, a spokesman for New York-based Citigroup; Tom Goyda of San Francisco-based Wells Fargo; Tom Kelly, a spokesman at New York-based JPMorgan; and Gina Proia of Detroit-based Ally Financial declined to comment on the settlement condition.

“We’re interested in finding a path forward with a comprehensive settlement that benefits homeowners and communities,” said Dan Frahm, a spokesman for Charlotte, North Carolina-based Bank of America, declining to comment further.

The proposed settlement already requires Massachusetts, Nevada and Arizona to settle claims tied to suits they have filed against the banks, a person familiar with the talks said.

Nevada and Arizona each sued Bank of America over mortgage- servicing practices, accusing it of misleading consumers, while Massachusetts sued all five banks.

Nevada Attorney General Catherine Cortez Masto said in a statement she was reviewing the settlement and “advocating for improvements to address Nevada’s needs.”

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Delaware Attorney General Beau Biden also said he was pushing for “improvements” and hasn’t signed the deal.

“Delaware’s timeline for agreeing to the settlement is dictated by whether our concerns are met,” Jason Miller, a spokesman for Biden, said in an e-mail.

Jenn Meale, a spokeswoman for Bondi, didn’t return a call seeking comment. Melissa Karpinsky, a spokeswoman for Massachusetts Attorney General Martha Coakley, declined comment.

Harris’s criticisms of the deal include terms that protect the banks from future litigation. Without Harris, the deal’s potential value will drop by several billion dollars, according to a person familiar with the negotiations.

“I’m less concerned with the timeline than the details,” Harris said in an e-mailed statement. “For the past 13 months we have been working for a resolution that brings real relief to the hardest-hit homeowners, is transparent about who benefits, and will ensure accountability. We are closer now than we’ve been before but we’re not there yet.”

Underwater Borrowers http://twitter.com/robsavestheoc

The proposed nationwide settlement would set requirements for how the banks conduct foreclosures, provide mortgage refinancing for underwater borrowers -- people who owe more on their mortgages than their homes are worth -- and both fund loan principal reductions and make payments to states and borrowers who lost their homes to foreclosure.

The accord, which must be approved by a federal judge, will also allow banks to take steps toward resolving mortgage liability stemming from the housing bust. The releases may protect them from legal claims tied to foreclosures, mortgage- servicing and origination of loans.

“From the standpoint of the banks, what matters to them is not the number of states but the percentage of potential claims that are being settled,” meaning that getting states such as California is important, said Scott, the law professor. “So there’s a lot of last-minute political posturing for political advantage on one side, and on the other, for the banks, their concern is basically the valuation of what the settlement gets me and what it’s worth.”

Scope of Liability

The scope of the liability releases has been one of the biggest concerns for some attorneys general, including Harris and Schneiderman, who started separate probes of mortgage operations of banks.

Schneiderman said in an interview Jan. 27 that there were “outstanding issues” still to be resolved and declined to say whether he would sign the deal.

The liability releases wouldn’t prevent an investigation into mortgage securitization, he said. Schneiderman was named to a state-federal group that will probe the bundling of mortgage loans into securities in the run-up to the financial crisis.

At least three states announced before the deadline their intention to sign the settlement -- Connecticut, Oregon and Louisiana.