FHFA Allows Ex-Owners to Buy Back Homes

The Federal Housing Finance Agency announced a new policy that will permit some foreclosed home owners to purchase the homes back that they once had lost at fair market value.

To regain ownership, the ex-owners must be able to pay the full current value of the property, and they still must wait at least three years after their foreclosure to regain ownership, which is required to purchase any home using a Freddie Mac or Fannie Mae–guaranteed loan following a foreclosure.

The FHFA, the regulator of Fannie Mae and Freddie Mac, says the new policy likely will lower the principal on the loans of the former home owners if they elect to buy their former homes back. Prior to the policy, the FHFA had required borrowers who had gone through foreclosure and who wanted to buy back their home to pay the entire debt they owed on the mortgage, even if it was much higher than the home’s current value.

“This is a targeted but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” says FHFA Director Melvin L. Watt. “It expands the number of potential buyers of REO properties and is consistent with the enterprises’ practice of requiring fair-market value for those properties.”

The new policy applies only to buyers’ former primary residence. Second homes and investor properties are not eligible.

Source: “Regulator OKs Some Fannie, Freddie Foreclosure Buybacks at Fair Value,” Los Angeles Times (Nov. 25, 2014) and the Federal Housing Finance Agency

Many Borrowers Facing Higher Loan Costs in 2014

Borrowers will likely see an increase in mortgage costs next spring, particularly those who lack a sizable down payment or have less-than-perfect credit scores. Mortgage giants Fannie Mae and Freddie Mac are raising the fees they charge lenders, which is expected to get passed on to borrowers.

According to Fannie Mae’s web site, some of the increases that borrowers can expect:

  • A borrower with a 30-year fixed-rate mortgage, a credit score of 735, and a 10 percent down payment will see fees rise from the current rate of 0.75 percent to 2 percent of the loan amount.
  • For those borrowers making a 10 percent down payment and who have a 750 credit score, fees are to increase from 0.5 percent to 1.5 percent of the loan amount.
  • Borrowers with credit scores of 775 and a 10 percent down payment will see fees rise from 0.5 percent to 1 percent.

Borrowers with higher down payments aren’t likely to escape some rises in mortgage costs either. For example, borrowers who have a down payment of 25 percent but a credit score of 690 will see fees rise from 1.5 percent to 2.25 percent.

Analysts predict that higher fees combined with rising interest rates and new mortgage rates could further tighten mortgage credit in the new year.

Source: “Why Mortgage Costs Could Rise in 2014,” The Wall Street Journal (Dec. 17, 2013) andFannie Mae

Need Remodeling Tips? Consult Your Smartphone

More home owners are turning to technology to help them plan and complete their home remodeling projects, according to a study by Planese Inc., a cloud-based application provider in home improvement.

Home owners are increasingly turning to their smartphones for information and inspiration, the study finds. Twenty-seven percent of home owners surveyed say they’ve used their smartphones to help with the remodeling of their homes. What’s more, 40 percent say they plan to use their smartphones to help guide them in future projects.

“This dramatic increase in smartphone use to help with remodeling is driven by a variety of changes: greater use of mobile devices, a need of home owners to get better results from their remodeling investments, and better apps,” says Dan Fritschen, founder of www.remodelormove.com. “Mobile devices are a great compliment to the PC. Smartphones enable regular and frequent communications that are critical to improving collaboration between home owners and contractors.”

Some of the top things that home owners report using their smartphone or computer to find are remodeling design ideas, cost estimates, names of remodeling contractors, and to conduct research on products and services.

Source: Planese