The Federal Housing Administration (FHA) published a Mortgagee Letter recently reminding lenders participating in the agency’s Home Equity Conversion Mortgage (HECM) Program to make certain senior borrowers are fully informed of all their options when applying for reverse mortgages. FHA’s Mortgagee Letter also reinforces the agency’s prohibition against misleading or deceptive advertising and that this prohibition extends to misleading or deceptive descriptions of the HECM program.

FHA’s guidance is intended to protect HECM borrowers from misleading advertising and presentations that appear to limit their options rather than informing them of the full range of available HECM offerings.

“Senior borrowers deserve freedom of choice when considering whether a reverse mortgage is appropriate for them,” says FHA Commissioner Carol Galante. “This guidance is intended to make sure lenders know we’re keeping a watchful eye on their marketing and advertising practices that might steer borrowers toward reverse mortgage options that limit their available choices.”

FHA-approved lenders are required to explain in clear, consistent language all requirements and features of the HECM program and may not mislead or otherwise cause a senior borrower to believe that the HECM product contains any features or limitations that are inconsistent with FHA’s requirements. For example, the mortgagee must explain:

• FHA insures fixed interest rate mortgages, as well as annual and monthly adjustable interest rate mortgages;
• The borrower has the ability to change the method of payment under the reverse mortgage ARM products at any time provided funds are available;
• Fixed interest rate mortgages are limited to the Single Disbursement Lump Sum payment option where there is a one-time draw at loan closing and no future draws post loan closing;
• Adjustable interest rate mortgages provide for five, flexible payment options, and allow future draws;
• The amount of funds available to the mortgagor is currently determined by the age of the youngest mortgagor, and
• The disbursement of mortgage proceeds during the first twelve-month disbursement period is subject to an initial disbursement limit as determined by requirements set by the Secretary.

Lenders are prohibited from using any misleading or misrepresentative advertising or marketing materials in connection with the HECM program or from making any statement or representation that could mislead a mortgagor as to his or her rights under a HECM. In addition, mortgagees may not state or imply that as a result of their approval to participate in FHA programs that any of their products have been endorsed by FHA or HUD. All advertisements or marketing materials used in connection with the HECM program must include a prominently displayed disclaimer that clearly informs the public that such materials are not from HUD or FHA and the document was not approved by the Department or Government Agency.



For more information, visit www.hud.gov.

In an effort to decrease homelessness, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan recently announced a second round of grants totaling $140 million to nearly 900 local homeless assistance programs across the country.

The funding, which has been provided through HUD’s Continuum of Care Program, will ensure the continuation of additional permanent and transitional housing renewal projects, providing both housing and support services to homeless individuals and families.

The recent grant announcement includes 436 new local projects aimed at providing permanent supportive housing for persons experiencing chronic homelessness through a Housing First approach and to “rapidly re-house” families with children that are living on the street or in emergency shelters. View a complete list of all the state and local homeless projects awarded funding, here.

“Communities all across the country are changing their approach to reducing homelessness and now is not the time to retreat from doing what we know works,” says Donovan. “Investing in proven strategies such as ‘Rapid Re-housing’ and ‘Housing First’ help to break the cycle of homelessness as we’ve known it in these communities.”

This year, local planning agencies called ‘Continuums of Care’ were asked to make strategic and hard decisions in order to implement a required five percent cut as a result of sequestration. While HUD was able to fund all eligible new permanent housing projects requested, the Department was only able to fund permanent housing and transitional housing renewal projects requested in this second round of grants (Tier 2). Despite these cuts and the tough budgetary decisions they forced, most local planners chose to reallocate funds from lower priorities in order to create projects following best-practice models that serve those homeless persons most in need and to help the community achieve the goal of ending homelessness.

With millions of homes across the country being sold each year, and the increasing number of foreclosures and short sales, the process of selling your home has become more complex than ever before.

"Seller disclosure statements, lengthy and tedious forms, and the emergence of buyer-brokers have made the process one that is difficult to navigate. You'll benefit from the services of a real estate agent with experience in many aspects of real estate transactions," says Brett Furman, a broker and owner in St. Davids, Pennsylvania.

Some of the distinct advantages of enlisting the services of a real estate agent include:

1. Marketing: An agent will showcase your property to other agents and public as well as through Multiple Listing Service (MLS) and online tools.
2. Security: When you work with an agent, you don't have to worry about letting strangers into your home.
3. Negotiations: An agent can help you evaluate offers and guide you through appraisals, inspections and financing issues.
4. Closing Process: An agent can help with issues surrounding the sales agreement and closing process.
5. Technology: Armed with a host of technological tools, such as Web sites and a video of the home's features, an agent can help you sell your home quicker.

Sick House Syndrome occurs when a house can’t “breathe” and rid itself of indoor pollutants, resulting in poor indoor air quality—a “sick house.” Inadequate ventilation allows these pollutants to build up, causing potential health risks to the home’s occupants. Young children, the elderly, and some chronically ill persons are most susceptible to the effects of Sick House Syndrome.

Common sources of indoor pollution include tobacco smoke, certain carpeting materials, furnaces and fireplaces, pressed wood cabinets and furniture, and household cleaning products. In addition, a buildup of moisture can cause mold, which can grow uncontrolled inside walls, crawlspaces, and other areas. Mold spores are released into the air and can also travel throughout the home via heating and cooling ductwork. 

How Can Indoor Pollution Be Reduced? 
Source control is usually the most effective way to improve indoor air quality. In some cases, eliminating the specific sources of indoor pollution—for example, removing carpets, repairing and maintaining faulty furnaces—is all that is necessary.

In increasingly competitive markets like Philly, your RIS Consumer Confidant knows it may not make sense for sellers to stubbornly sit on a property with a fixed price set in their mind and no room to budge.

Zip, real estate firm in Philadelphia, Penn., recently advised their clients via a web blog on how to get the right price when selling a home in their market.

They ask potential sellers to consider two strategies that may work well in home sale negotiation, which could easily apply in accelerating markets all over the country:

• Avoid pricing your home higher than the value of your home’s comparables.  Zip says rather than pricing your home on the higher end, you want to set a fair price in hopes that buyers will compete to drive up the price. If you know your home will sell quickly, perhaps because of location, amenities, or the community, then this strategy can work very well for you. It depends, though, on effective marketing and getting plenty of attention from likely buyers. That can be a lot to ask for.

• Price the home at a value that is higher than what you need to sell it for, and then plan to negotiate with buyers. This is an important strategy when you have a mortgage or you need to sell for at least a set dollar amount according to Zip. This is only recommended if your are not under any time constraints or when you are not under any pressure.

A: A mortgage makes homeownership possible for most people. In the simplest terms, it is a loan that is secured by real property. The lender holds title to the home until the loan is completely repaid. If you fail to pay up, the lender has a right to take the property, sell it, and recover the money that is owed.

The amount of a mortgage will vary greatly depending on the down payment you make to reduce the amount of money that is needed to finance the home. You may put as much money down as you like, or you can sometimes pay as little as 3 to 5 percent of the purchase price, or sometimes nothing at all. The more you put down, the more you reduce the amount that is financed, thereby lowering your monthly payment.

The monthly payment consists of both principal and interest but also typically includes additional amounts to cover property taxes and insurance – specifically hazard insurance and private mortgage insurance, the latter of which is required for down payments less than 20 percent of the purchase price.

Homebuyers in the U.S. have access to several different types of mortgage loans.

Today's “Ask the Expert” column features Doug Breaker, President and CEO of HomeFinder.com.

Q: Are open houses still relevant in the current real estate market, and how can real estate professionals update their open house strategy?

A: In a competitive real estate climate, a well-executed open house is a proven way to sell a listing. We regularly speak with many successful real estate agents on what sets them apart in their local markets. The most successful real estate agents understand the importance of well-executed open houses as a valuable selling tool. A strategically planned open house achieves one of three goals: 1) sell the home; 2) network with potential clients; and 3) provide your sellers with valuable feedback.

In late 2013, HomeFinder.com acquired Open Home Pro, the open house iPad app that thousands of real estate agents use—and love. Open Home Pro provides agents clear data on attendees, offers easy follow-up methods, and can help facilitate a faster sale. According to Open Home Pro data from March 2014, approximately 60 percent of visitors who signed into open houses via Open Home Pro did not have an agent yet. This data shows that open houses also offer a tremendous opportunity to gain new clients.

The following five tips will help you rethink your open house approach and lead to your most successful selling season yet.

1. Counsel your clients. Prepare your sellers before your open house begins. Educate them on open-house best practices like staging, depersonalizing and decluttering. Encourage them to remove picture frames, personal items and any indication of pets. Walk them through what will happen the day of the open house, including what time they should leave the home and how you plan to highlight the listing’s best assets.

According to recently released data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, mortgage applications decreased 9.2 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 9.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index decreased 13 percent from the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 15 percent lower than the same week one year ago.

“Interest rates increased relative to the previous week, as incoming economic data continues to suggest a pickup in the pace of growth,” says Mike Fratantoni, MBA’s Chief Economist. “Although the average rate for the week was up only a few basis points, the increase was matched by a large drop in refinance volume, and purchase application volume also declined. Some lenders continue to report that they have pre-approved borrowers who have been unable to find a property given the tight inventory in certain markets.”

The refinance share of mortgage activity decreased to 52 percent of total applications from 54 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.36 percent from 4.34 percent, with points increasing to 0.24 from 0.16 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

Declines in both single- and multifamily starts pushed nationwide housing production down 6.5 percent in May to a seasonally adjusted annual rate of just over 1 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. However, single-family permits, which can be an indicator of future building activity, rose 3.7 percent.

“The dip in single-family production shows builders continue to move carefully in adding inventory,” says Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. “They are also facing supply chain issues, such as access to lots and labor.”

Single-family housing starts were down 5.9 percent to a seasonally adjusted annual rate of 625,000 units in May. Meanwhile, multifamily production fell 7.6 percent to a seasonally adjusted annual rate of 376,000 units.

“The encouraging news is that single-family permits are up by almost 4 percent,” says NAHB Chief Economist David Crowe. “The modest increase is evidence that builders expect continued release of pent-up demand and a gradual expansion of the housing market. We are still forecasting a 12 percent increase in total housing starts for the year.”

Average fixed mortgage rates increased last week, as revealed by Freddie Mac's recently released Primary Mortgage Market Survey®. According to experts, the surge may partly be in response to recent job growth and economic improvement.

The survey showed that 30-year fixed-rate mortgage (FRM) averaged 4.20 percent with an average 0.6 point for the week ending June 12, 2014. The previous week, the numbers were at 4.14 percent, and one year ago at this time, the 30-year FRM averaged a scant 3.98 percent.

The 15-year FRM is also up, with the most recent numbers averaging 3.31 percent with an average 0.5 point, up from the previous week's 3.23 percent, and the previous year's 3.10 percent.

"Mortgage rates continued to climb for the second week in a row following the increase in 10-year Treasury yields,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “Also, the economy added 217,000 jobs in May, following a 282,000 surge in April and a 203,000 increase in March. Meanwhile, the unemployment rate in May held steady at 6.3 percent."

The survey showed that the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.05 percent with an average 0.4 point, up from the week prior when it averaged 2.93 percent, and a year ago, at 2.79 percent. 



The only decreased result was the 1-year Treasury-indexed ARM, which averaged 2.40 percent with an average 0.4 point, unchanged from last week and decreased from this time last year, when it averaged 2.58 percent.

For more information, visit www.freddiemac.com.