Mortgage Loans Understand the Terms of Your Loan Before You Sign

This brochure can help you become familiar with basic mortgage loans, determine what terms are best for your situation, and identify issues you should be aware of before taking out a mortgage loan.

Mortgage loans are secured by a borrower’s home. This means that if you are unable to make the monthly payment for the mortgage, the lender can foreclose and take your home. The amount of your loan will be determined by your home’s value minus any liens or unpaid mortgage(s).

Standard home equity loans or second mortgages are closed-end loans, meaning the loan proceeds are usually made available in a lump sum. These loans can have a fixed term, a fixed interest rate, and fixed monthly payments, or they can carry an adjustable interest rate that fluctuates with an index, such as the prime rate. Some adjustable-rate mortgages (ARMs) are “hybrid ARMs” which have a fixed rate for an initial period, then a fluctuating rate for the remainder of the loan.

Reverse Mortgage Loans Borrowing Against Your Home

Since the publication of this booklet in 2008, there have been a number of important changes in the reverse mortgage world. The following is a summary of these issues, as they affect the content of this book as of October 2010. Page numbers are provided to help you find the areas of the book that are affected by these changes. Property eligibility: Though legislation to allow HECM loans on cooperatives was passed, the enabling regulations have not been finalized, so as of this time (October 2010), cooperatives are still not eligible. (page 8)

Home value limits: The nationwide home value limit of $417,000 on HECM loans was raised to $625,500 and will continue at that level until at least December 2011. This increase made HECMs more attractive for borrowers with higher value homes, and is one reason for the disappearance of proprietary loans. (pages 9, 26, 32)

Manufactured Housing Finance and the Secondary Market

Manufactured housing, or mobile homes, is often the most attractive housing option for many low- and moderate-income Americans. Reinforcing the concept that it is expensive to be poor, the financing of manufactured housing is often much more expensive than it needs to be. This article reviews how the  current financing for manufactured homes functions, explores why it is so expensive, and suggests an important strategy to reduce its costs by pursuing a secondary market for manufactured home mortgages.

The benefits to low- and moderate-income home owners of a more efficient manufactured home mortgage market would be substantial, for as many as 10 million families live in manufactured homes. Many are low-income families, the group for whom home ownership is one of the only sources of wealth and financial stability. Indeed, manufactured housing is a key resource when it comes to providing home-ownership opportunities for low- and moderateincome families, accounting for two-thirds of this country’s new affordable housing production in recent years.

There are many obstacles to creating this more efficient mortgage market, but that was also once true for site-built homes when credit was expensive and home-ownership rates were low. Over the past fifty years, however, the U.S. mortgage market has created ample capital flows and continued product innovation that have contributed to a home-ownership rate over 70 percent and a climate—unique in the international context—in which an 80 percent loan-to-value, thirty-year mortgage is considered “plain vanilla.” The following explores how that same vibrancy can spread to the manufactured housing market.

MANUFACTURED HOME LOAN POOLS AND LOAN PACKAGES —SPECIAL REQUIREMENTS

OVERVIEW OF CHAPTER
This chapter describes special requirements that apply for a pool of manufactured home loans. The requirements described in this chapter may modify, supplement or, in some cases repeat, for the purpose of emphasis, those set forth in previous chapters with respect to Issuer eligibility and servicing requirements, loan eligibility, pool and loan package requirements, required pool and loan package submission documents and the securities. Manufactured home loans may include loans secured only by a manufactured home unit or both the manufactured home unit and a developed manufactured home lot acquired in a single transaction. The pool suffix is “MH”.

MH pools may only be formed under the Ginnie Mae MBS II Program. Eligible pool collateral may include manufactured home loans whose initial loan application date occurs on or after June 1, 2009; the applicable MBS II pool type shall be “C MH”. Effective with security issuances on or after October 2010, manufactured home loans will be ineligible for pooling in “X MH” and “M MH” pool types.

Delivering Manufactured Housing Loans to Fannie Mae Frequently Asked Questions

General
Q1.
What is a manufactured home?
Fannie Mae defines a “manufactured home” as any dwelling that is built on a permanent chassis and installed on a permanent foundation system. Manufactured homes must meet the federal Manufactured Home Construction and Safety Standards of June 16, 1976 (the HUD Code) as well as other guidelines per the Fannie Mae Selling Guide.
Other factory-built housing (not built on a permanent chassis), such as modular, is not considered manufactured housing (MH) and is treated the same as site-built housing, and thus is not subject to the MH guidelines.
Q2.
What is a modular home?
Modular homes are homes built in modules at a factory. The modules are transported to the home site on flat-bed trucks and installed. Unlike MH, modular homes conform to the same state, local, and regional codes that apply to site-built dwellings.
Off-frame modular homes are covered by the Fannie Mae Selling Guide as standard single-family detached homes and not as MH. On-frame modular homes are not considered single-family homes and loans secured by such properties are not eligible for delivery to Fannie Mae at this time.
Q3.

Flex Loan Home Improvement Loans

Borrow up to $15,000 and take up to 7 years to repay!
No government red tape or restrictions with this loan! Check these Flex Loan advantages …

• $650 total loan fees and closing costs (appraisal included)
• Nothing hidden! No gimmicks! Everything is right up front for you to decide
• You make the choices on the home improvements you want
• Written work specification prepared for you and sent out for bid to our list of licensed contractors, or you select the contractor
• Use the Flex Loan for whatever remodeling you wish to do without having to bring entire house up to code

Home Improvement Loan Program

The People’s Bank/Connecticut Housing Investment Fund, Inc. (CHIF), HomeImprovement Loan Program, provides loans to eligible homeowners who wish to repair or renovate their homes. Homes must be one- to four-family residential properties that are located in Connecticut and are owner-occupied. Homeowners may borrow a minimum of $400 and a maximum of $10,000 at a 7.99 percent fixed rate. The loan amount a person can receive depends upon his or her ability to repay the loan. The maximum loan term is 10 years. Repayment is based on this maximum term, but borrowers can repay the loan sooner if they wish, with no pre-payment penalty. Eligible improvements that can be made with this loan program include:

VA GUARANTEED HOME LOANS FOR VETERANS

The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is usually lower than the rate charged on other types of mortgage loans. For VA housing loan purposes, the term "veteran" includes certain members of the Selected Reserve, active duty service personnel and certain categories of spouses.

This pamphlet should help you to understand what VA can and cannot do for the home purchaser. However, it is not a legal document and should not be interpreted as one. Nothing should be taken as a change of law or regulations. The pamphlet does not attempt to go into detail or into unusual problems. Information about VA loans is given in a narrative format followed by questions and answers in those areas of the greatest concern.

It is suggested that the pamphlet be read in its entirety. Please pay particular attention to the information about your responsibility to determine the condition of the property you purchase and to the information about assumption of your VA loan and obtaining a release of liability. Any questions you have which are not answered should be directed to your VA Regional Loan Center, or to your lender who will take them up with VA, if necessary. A list of VA offices with loan activities may be found in the back of this pamphlet.

2011 VA County Loan Limits for High-Cost Counties

That is information about Va Loans. The Department of Veterans Affairs Loan Guaranty program does not impose a maximum amount that an eligible veteran may borrow using a VAguaranteed loan. However, the following county “limits” must be used to calculate VA’s maximum guaranty amount for a particular county. These limits apply to all loans closed January 1, 2011 through September 30, 2011.

Fiscal Year 2012 county loan limits will be made available as soon as possible. The maximum guaranty amount (available for loans over $144,000) is 25 percent of the 2011 VA limit shown below. Therefore, a veteran with full entitlement available may borrow up to the 2011 VA limit shown below and VA will guarantee 25 percent of the loan amount. If a veteran has previously used entitlement that has not been restored, the maximum guaranty amount available to that veteran must be reduced accordingly. Lenders should check their own investor requirements regarding guaranty amounts and downpayments. Questions about VA loans in a particular county may be directed to the VA Regional Loan Center listed for that county.

The Home Equity Conversion Mortgage

The HECM is the only reverse mortgage insured by the federal government. HECM loans are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD). The FHA tells HECM lenders how much they can lend you, based on your age and home value. The HECM program limits your loan costs, and the FHA guarantees that lenders will meet their obligations.

HECMs Versus Other Reverses

HECM loans generally provide the largest loan advances of any reverse mortgage. HECMs also give you the most choices in how the loan is paid to you, and you can use the money for any purpose. Although they can be costly, HECMs are generally less expensive than privately insured reverse mortgages. These other  reverse mortgages may have smaller fees, but they generally have higher interest rates. On the whole, HECMs are likely to cost less in most cases. A notable exception may be the reverse mortgages now being developed by some credit unions.

Introducing Reverse Mortgages

Until recently, there were two main ways to get cash from your home: you could sell your home, but then you would have to move; or you could borrow against your home, but then you would have to make monthly loan repayments.

Now there is a third way of getting money from your home that does not require you to leave it or to make regular loan repayments.

Reverse Mortgage Loans: Borrowing Against Your Home much equity or ownership value you have in your home. But they do so in opposite ways. “Debt” is the amount of money you owe a lender. It includes cash advances made to you or for your benefit, plus interest. “Home equity” means the value of your home (what it would sell for) minus any debt against it. For example, if your home is worth $150,000 and you still owe $30,000 on your mortgage, your home equity is $120,000.

Reverse Mortgage Loans Borrowing Against Your Home

1) Do you really need a reverse mortgage?

Why are you interested in these loans? What would you do with the money you would get from one? Are the needs you intend to meet really worth the high cost of these loans? If you want to take that dream vacation, a reverse mortgage is a very expensive way to pay for it. Investing the money from these loans is an especially bad idea because the loan is highly likely to cost more than you could safely earn. If anyone is trying to sell you something and recommending you use a reverse mortgage to pay for it, that’s generally a good sign that you don’t need it and shouldn’t be buying it. Be especially wary if you don’t fully understand what they are selling or aren’t certain that you need it.

Do bank loans and credit standards have an effect on output?

The .nancial crisis which surfaced in August 2007 has highlighted the vulnerability of .nancial intermediaries, and more speci.cally of the banking system, at least along two interrelated dimensions. On the one hand, faced with the risk of insolvency due to the erosion of their capital base after heavy losses, banks have been in need of raising fresh capital, whether through private investors or government aid programmes. On the other hand, banks have experienced di¢ culties in raising funds at medium and long-term as well as at short-term: inter alia, spreads on bank bonds increased to unprecedented levels, while Libor-OIS spreads in the inter-bank money markets also reached historical peaks, especially following the demise of Lehman Brothers, the US investment bank, in September 2008. Moreover, banks.ability to securitise their loans and transfer credit risk o¤ their balance sheet was seriously disrupted adding further strains on their access to funding.