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January 21, 2010
Affordable Financial Services Comments On The Recent Changes in FHA Lending Requirements
HAUPPAUGE, NY — Commenting on the recent changes in the Federal Housing
Administration's (FHA) lending requirements, Brian Leibowitz, CEO and owner
of Affordable Financial Services, said the new changes will prevent
first-time homebuyers with poor credit from entering the market.
On January 20, the FHA announced tighter lending requirements on loans
insured by them. As per the changes, new borrowers will now require a
minimum credit score of 580 to qualify for the 3.5% down payment. Those with
a score lower than 580 will need to make a minimum down payment of 10%. The
upfront mortgage insurance premium will now increase from 1.75% to 2.25% of
the total loan amount. To discourage inflated appraisals, the amount of
money that sellers can provide to homebuyers at closing will be reduced from
6% to 3%.
"These changes are an attempt by the FHA to keep its cash reserves above
the Congress-mandated levels, which have fallen recently due to rising
mortgage defaults," Mr. Leibowitz said. Currently, the FHA insures 30% of
all new loans, a big increase from 3% in 2007. Last year alone, the FHA
insured 1.9 million loans.
Earlier, "subprime" borrowers with poor credit scores could get loans at
higher rates. But after the financial crisis, banks stopped offering these
loans and the same borrowers could get loans from the FHA at a down payment
of 3.5% versus the standard 20 percent by paying mortgage insurance premiums
to the FHA.
"The new lending requirements will help the FHA reduce lending risk and
prevent losses caused by borrowers who default on loans, especially in times
of declining home prices and high unemployment. This will help stabilize the
housing market in general," Mr. Leibowitz said. "At the same time, borrowers
who fail to qualify elsewhere will be unable to get a loan. This will
prevent many first-time homebuyers from entering the market."
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October 28, 2009
Affordable Financial Services Comments On Rise In Foreclosures During The Third Quarter
Offers tips and advice to homeowners on preventing foreclosures
HAUPPAUGE, NY — With the current unemployment rate in the U.S. rising to nearly 10%, the foreclosure crisis has affected nearly 938,000 properties between July to September, compared with 890,000 in the previous quarter, and a 23% increase from the third quarter of 2008. According to RealtyTrac, if this trend continues, foreclosures may hit about 3.5 million this year, compared to 2.3 million homes last year.
“With foreclosure rates rising, it is important for homeowners to be educated about how they can prevent foreclosures. Though the Federal Government’s $75 billion loan modification program has achieved its goal of beginning trial loan modifications for 500,000 financially-troubled homeowners, a large number of homeowners are still at risk,” said Brian Leibowitz, owner and CEO of Affordable Financial Services in Long Island.
According to Mr. Leibowitz, though many lenders consider troubled homeowners for a mortgage modification to avoid foreclosure, more borrowers could face foreclosures as their moratoriums end. “I believe that homeowners should be given the opportunity and help needed to keep their homes. The loan modification process can be very confusing for homeowners. The fact is there are no real set parameters that qualify a homeowner for a modification,” said Mr. Leibowitz.
He also added that most banks are currently taking between six months to a year to make a decision on a mortgage application. Quite often, after waiting for so long, the loan modification is denied and the homeowner has to eventually face foreclosure. “Buyers who apply for loan modifications should first understand what the process entails. Loan modifications can affect your credit rating by a 50-100 points. If your financial situation is only temporary, it may not be the best option since it would be difficult to rebuild your credit.”
To prevent a foreclosure, Mr. Leibowitz advises borrowers to contact their lender to discuss foreclosure prevention options as soon as they realize they have a problem making payments – the longer they wait, the fewer options they may have. They should also be wary of foreclosure recovery scams and educate themselves about their mortgage rights and foreclosure laws and time-frames in their state.
“At Affordable Financial, we believe the best way to stay in your home with an affordable payment is to assess the current situation and determine what steps are necessary to qualify for a refinance. A refinance has set parameters that have to be met in order to qualify, which helps our loan officers determine what needs to be done to make the refinance a reality,” Mr. Leibowitz commented.
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October 14, 2009
Long Island's Affordable Financial Services Predicts Slow But Steady Growth For The Mortgage Industry
Advises borrowers to consider refinancing as an option
HAUPPAUGE, NY — After a surge in mortgage applications last week in the U.S., Long Island’s Affordable Financial Services predicts a slow but steady recovery for the mortgage industry, which has been adversely affected by the recent slump in the housing market. During the week ended October 2, the Mortgage Bankers Association’s (MBA) index of applications to purchase a home or refinance a loan increased by 16% to 756.3 from 649.6 in the previous week.
“Lower home prices, falling mortgage rates and tax credits for first-time buyers have all contributed to an increase in home sales. This should, in the long term, contribute to a slow but steady growth in the mortgage and real estate industry,” said Brian Leibowitz, Owner of Affordable Financial Services, based in Long Island, New York.
At the same time, the MBA’s refinancing gauge rose by 18 percent, as the number of applicants seeking to refinance loans rose to 66.3 percent of total applications from 65.3 percent, the highest since May this year. “With mortgage rates falling below 5 percent, many applicants are finding refinancing to be an attractive option. They want to lock in the low rates before they start going back up again,” Mr. Leibowitz said.
According to the MBA, the average rate for a 30-year fixed-rate mortgage, excluding fees, averaged 4.89 percent in the week ended October 2. During the three-week period that mortgage rates have fallen below five percent, refinancing demand went up by 38 percent.
However, the fall in rates may be short-lived with the Federal Reserve’s recent announcement that it would slow down on purchases of mortgage-backed securities and agency debt, which may cause mortgage rates to climb back up again. “Refinancing may be a wise decision for many borrowers right now. At current rates, they can save on nearly $134 on monthly payments on a $200,000, 30-year fixed-rate loan,” Mr. Leibowitz said.
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