RATE NEWS SUMMARY- ORANGE COUNTY REAL ESTATE
From Freddie Mac’s weekly survey: The 30-year fixed rate improved 1 basis point to 4.01 percent from last week’s 4.02 percent. Ditto for the15-year fixed, going to 3.20 percent from last week’s 3.21 percent.
The Mortgage Bankers Association reports a 2 percent decrease in loan application volume from the previous week.
BOTTOM LINE: Assuming a borrower gets the average 30-year conforming fixed rate on a $417,000 loan, last year’s rate of 4.35 percent and payment of $2,075 is $82 more than this week’s payment of $1,993.
WHAT I SEE: From rate sheets hitting my desk that are not part of Freddie Mac’s survey: Locally, well qualified borrowers can get a 30-year fixed rate loan (up to $417,000) at 4.125 percent, a 15-year fixed at 3.375 percent or a high balance (to $625,500) at 4.25 percent, all with no-cost.
WHAT I THINK: After losing your home in the midst of the mortgage meltdown, would you ever want to buy again? Can you garner enough optimism and intestinal fortitude to make a plan, to save up money, to re-earn your good credit scores?
And, would any new lender ever want to take a chance on you again after you failed your last lender, ending up in foreclosure or short-sale?
Orange County has about 750,000 residential properties with one to four units, according to the Orange County Assessor’s Department.
From January 2010 through December 2013, short sales, foreclosure starts, and deeds-in-lieu of foreclosure totaled approximately 86,400, according to Daren Blomquist, vice president of Irvine-based RealtyTrac. A whopping 11.5 percent of O.C. residential property owners suffered through the property value collapse during that time frame.
Bette and Gary Springer bought a Ladera Ranch home in 2005, paying $860,000. Over time they refinanced and pulled cash out, eventually owing 1.1 million dollars.
Being self-employed, business was off during the Great Recession. The Springers could no longer pay the mortgage, settling on a short-sale price of $700,000 in August, 2011.
“It was devastating to lose our home in Ladera. We felt like failures,” said Bette.
After doing research on the Internet and asking people in the mortgage business, they set their goal on homeownership again. Bette went out and found a job. Their family business improved.
“Gary put a calendar on the wall as to when we could buy again,” said Bette.
They closed escrow on a Rancho Santa Margarita home in October 2013, putting 20 percent down, paying $529,000.
“We just love (the new home). It makes us feel better about ourselves and our lives,” Bette added.
If you’ve completed a short sale (in which the lender accepted less money than what was actually owed on the mortgage), or executed a deed-in-lieu of foreclosure (signed title back to the lender), and you are seeking a conventional loan and you have extenuating circumstances, your waiting period is just two years. Foreclosure with extenuating circumstances is a three-year waiting period.
“Classic examples of extenuating circumstances are job loss, medical, death of a co-borrower, distant job transfer,” said Andrew Wilson, senior director, media and external relations at Fannie Mae.
If there are no extenuating circumstances, there’s a waiting period of four years for a deed-in-lieu or short sale. Foreclosure requires a seven-year timeout.
Be mindful that you must be able to support any extenuating facts with third-party proof. It’s always the lenders’ call to grant credit or not.
You must also re-establish credit within those same applicable timeout periods in addition other standard qualifying rules. If your credit is really wrecked, start by getting a secured credit card loan at your bank or credit union by depositing $500 and borrowing against that deposit and pay it back each month.
Not all lenders do manual underwriting. Extenuating circumstance loans often require manual underwriting opposed to Fannie Mae’s or Freddie Mac’s machine readers that might decline borrowers purely based upon credit report mortgage crash dates.
Lastly, lenders commonly delay and misreport to credit bureaus the settlement month of a completed short-sale or foreclosure. Your HUD-1 settlement statement can prove the correct, earlier month to your lender. Contact us at Integrated Realty Group for help.