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OCTOBER 2013 • VOLUME 18 • ISSUE 6
Latest in mortgage news: pass it on By Stacy Hale
I
nterest rates are up, the government experienced a shutdown, and changes to rules and regulations are causing some waves in the mortgage industry. Here is some of the latest mortgage news and the areas that are most affected.
Interest rates
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“We have seen a rally in interest rates ever since the Fed announced that there would be no tapper,” says Chad Overhauser of AmeriPro Funding. Of course, the Federal Reserve left language in their announcement that in-
dicates that they will continue to evaluate the "data" and may make changes in the future based on what they see. The Fed’s decision to stop purchasing mortgage-backed secu- rities signaled signs of a healthier economy and drove rates u p from the 3 percent to the 5 percent range, so you can follow their an n ou n c e ments to get an idea of when rates will rise or fall. Historically, however, interest rates as still very low (and have fallen since a recent government shutdown) and inventories seem to be creeping up, so it is great time to purchase a house.
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Federal Housing Administration (FHA) In the second quarter of this year the FHA made a significant change to its mortgage insurance program. Now FHA mortgage insurance is in place for the life of the loan. This is in contrast to the old program where the insurance could fall off once either the loan reached a certain maturity or the loan-to-value fell below a certain level. Overhauser explains that a significant impact of this change is that more customers are seeking financing via traditional conventional loans as the mortgage insurance requirement on those loans remained unchanged. Conventional loans still offer a 3 percent down program that now competes well with FHA financing options.
United States Department of Agriculture (USDA)
The new census maps have been released for USDA. These census maps determine the eligible areas for USDA financing. With the recent changes to the eligibility and the growth in previously “rural” areas of Central Texas that have seen a surge of suburban growth, there would many homes that are no longer eligible for USDA financing. S i n c e USDA is one of the only r e maining 100 percent loan programs, this will impact the first-time homebuyer. Fortunately, the change (originally scheduled to take place Oct. 1) was pushed back, and the 100 percent USDA financing is still available based on the old Census, at least until the first of next year.
Amendment to TILA Points and Fees Definition (and Qualified Mortgage Standards) The Consumer Financial Protection Bureau (CFPB) has amended Regulation Z, which implements the Truth in Lending Act (TILA). The final rule puts into place certain sections of the Dodd-Frank Act, and will require creditors to make a reasonable, good faith determination of a consumer’s ability to repay a home loan before issuing the loan. The idea is to prevent consumers from taking on mortgages they can’t handle, and discourage predatory lending practices. It also makes certain exceptions for “qualified mortgages,” explains Penny Green of Willow Bend Mortgage. In a qualified mortgage, borrowers cannot exceed a debt-toincome ratio of 43 percent. The requirement goes into effect Jan. 2014.
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Upcoming Events Friday, October 18 NAPMW Annual Monster Mash Bottle Auction Shoal Crossing - 5:30 to 10 p.m. Sat & Sun, October 19 - 20 NARI 2013 Remodeled Homes Tour - Various locations - 12 to 6 p.m. Wednesday, October 23 HBA Annual BBQ Bash & Elected Officials Appreciation Night HBA Office - 6 to 9 p.m. Thursday, October 31 ABoR Halloween Trick or Treat ABoR Office - 3 to 5 p.m. Monday, November 4 Patten Law Firm: "Tee Off For Tykes" - Top Golf - 3:30 to 6:30 p.m. Thursday, November 7 Brookfield Residential: Hot On! Homes Realtor Event Blanco Vista - 11:30 a.m. to 1 p.m. Saturday, December 7 ABoR Installation & Awards Gala ZACH Theatre - 6 to 11:30 p.m. More at www.myRealtyLine.com