If you’re interested in refinancing your house right now, it is extremely important that you know who owns your home loan. The fact of the matter is that loans owned by Fannie Mae and Freddie Mac have some very specific refinancing options right now. Figuring out who owns your home loan is the first step in discovering what kind of programs are available to you.

The first place to look is with your mortgage service provider. This is the company that services your loan, and whose name is on the bill every month. You can simply call their customer service department and ask them, “Does either Fannie Mae or Freddie Mac own my home loan?” Try to ask the question in this yes-or-no fashion, as some companies may not answer a more open-ended question such as “Who owns my home loan?”

If you’re unable to make progress with your service provider, you can check directly with Fannie and Freddie. Fannie Mae’s toll free number is 800-732-6643, and they’re available from 8 AM until 8 PM Eastern. Freddie Mac has a similar service, at 800-373-3343.

Why is all of this important? Why do you need to know who owns your home loan? Right now, the Home Affordable Refinance program lets you refinance your mortgage for up to 105 percent of your home’s value, but this program is only available if the loan is owned by Fannie Mae or Freddie Mac.

If you want to refinance your mortgage, start by finding out who owns your home loan today.

WASHINGTON, DC - Last week, the Fed’s Federal Open Market Committee announced that they were leaving rates unchanged.  However, what wasn’t reported by main stream news organizations is the real story.

According to the statement released by the Fed, in an effort to “provide support to mortgage lending and housing markets” they will “purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt.”  Additionally, “they expect to gradually slow the pace of these purchases in order to promote a smooth transition.”

So just what does this mean for rates?  “In short - They are going to go up.  It’s simple supply and demand,” says Scott Messina, publisher of Mortgage Market Live.  “Just how fast remains to be seen, it really all depends on how fast the Fed turns off the spigot.”

This year in an effort to stimulate housing and the economy at large, the Fed began purchasing the oversupply of debt.  Without this “help” from the Fed, rates would have been forced higher to attract more investors.  Instead the Fed has been quietly buying this oversupply to keep rates artificially low.

“The problem of course, is once this helping hand is pulled back, rates have no where to go but up.” added Messina.  “The saving grace is that rates will likely be very volatile for the next several months. Originators should always remember that volatility can equal opportunity.”

“If you’ve watched rates over the last several weeks, there has been at least one day each week that was preferable for rates. Originators that knew which day to lock in their customers loans have saved their customers, on average over a quarter of a percent in rate.”

So how can an originator take advantage of the volatility?

Simple, just keep your eye on the Mortgage Backed Securities (MBS) Market.  After all it is the MBS market that directly effects mortgage rates, not Treasury securities.  But obtaining MBS data can get expensive.  In fact, some services charge upwards of $100 a month for access to this important information.

Last time, we looked at how buying a foreclosed home can save you money and possibly get you into a bigger or nicer house than you otherwise may have been able to buy.  I also shared some of the challenges of trying to buy before or during the foreclosure sale. Today, I want to talk about the optimal time to buy a foreclosed home: once it’s actually owned, no strings attached, by the bank.

By waiting for a foreclosure sale to come and go, the issue of ownership is resolved.  Once the owner’s redemption period ends, the bank will secure and take possession of the home.  Any worries about secondary liens, squatting owners, and potential legal actions are or will be eliminated now that the bank has control of the home.  Shortly after taking possession, the bank’s “asset manger” will typically arrange for an inspection and valuation of the home.  The BPO (Broker Price Opinion) is a relatively quick and inexpensive method for the banks to get an idea of what kind of “asset” they now own  and its current marketable value given the condition of the home.

The BPO will also drive the bank’s initial listing price.  These “asset managers” are dealing with hundreds of homes and hundreds of BPOs.  And most of the asset managers are in other states from where the actual property is located.  So, it’s probably safe to assume that a great deal of weight is placed upon this BPO, this quick and cheap form of valuing the “bank asset”.

The opportunity for buyers (aside from buying in this already depressed real estate market) is finding a home who’s BPO came in well below current market value creating a really good bargain of a deal.  Sometimes the BPOs are fine, but the asset manager literally has to quickly move a block of homes off their books.  So, they price them to “sell”.  Obviously, the asset manager’s job is to balance getting the best price with moving the homes quickly, a challenging task especially since there’s so much foreclosure inventory.

Of course, buying a bank-owned home isn’t all just bargains and deals.  It’s also quite different than buying a home from a traditional seller.   For example, the price is usually based on an “as is” condition and very few banks will make significant repairs, if any, prior to closing.  While you can make the purchase agreement contingent on an inspection, sometimes it’s difficult to know for sure the total extent of potential repair and maintenance issues.  In addition, getting mortgage financing is more difficult if the home needs repairs.  Very few loan programs allow for “renovation funds” and most lenders want health and safety related items completed before they’ll approve the loan to close.  The question then becomes “who’s gonna make the repairs and who’s gonna pay for them?”  There are solutions, some more creative than others.  If you find yourself in need of some guidance here, feel free to give me call.

The time to buy is now.  So get out there and find yourself a deal!  If you need a good bank-owned property real estate agent, I’m sure I can round up a couple names there as well.

I want to take a couple of days and talk about buying a foreclosed home. Buying a foreclosed home can be a tremendous boon, as you can often get more house for less money. However, there are some important things to consider about the timing of your purchase in relation to the overall foreclosure process.

If you’re looking into buying a foreclosed home, there are several points along the process where you will have the opportunity to jump in. At each point, however, there are a number of different factors that you need to consider. In many cases, trying to buy a foreclosed home too early can leave you with a home that has unexpected problems, while waiting too long can mean that the home is no longer available.

The first point at which you can try to buy a foreclosed home is when the home goes into foreclosure. The lender is required to place a public notice that this is the case. You’ll have to act fast at this point, and probably have some contact with a potentially disgruntled homeowner. Until the actual foreclosure sale, the home belongs to that person, and approaching them about a sale may be challenging at best. The fact is that the homeowner probably is still hoping to keep their home, rather than sell.

The most realistic time to begin the process of buying a foreclosed home is at the foreclosure auction. The foreclosure auction will typically be held on the steps of the local courthouse. The lender will start the bidding on the foreclosed home typically at the amount of the current mortgage. The obvious downside to buying a foreclosed home at this stage is that you are really buying the home without a chance to inspect it or to see what kinds of repairs it may need.

There also may be statutory redemption periods where the owner still retains possession and control even after the sale and purchase.  In Michigan the typical redemption period is 6 to 12 months.  Meanwhile you likely had to pay cash for the home at the action, haven’t been able to inspect it, don’t have the right to access it until after the redemption period, and you may still have to legally evict the previous owner after the required period because he/she just didn’t move out.

If all that’s not enough to deal with, what if the owner being foreclosed upon files a law suit claiming that the foreclosure process wasn’t properly executed?  What if a junior lien holder does the same?  You could find yourself tied up in court, spending thousands more, and possibly having to take the home all the way back through the foreclosure process again, and yes, wait out yet another redemption period.  This is an extreme example, but it has indeed happened so you should be aware of the risks of buying at auction.

I’ll cover a more attractive method of buying a foreclosed home in my next post, Part Two.  Until then, make it a great day!

Today, there are more bank owned properties than ever in most places. The process whereby a house becomes a bank owned property is a fairly simple one. Once a home is foreclosed and auctioned, if the auction price doesn’t meet the minimum bid the bank will buy the home.

Bank owned properties offer several potential benefits to buyers. First and most important is, of course, the price. A bank owned property will usually be priced lower, and sometimes a great deal lower, than a property sold by a traditional seller. In addition, buying a bank-owned property creates a situation with less risk than, let’s say, buying a home at auction.

Still, there are some things you need to watch out for when it comes to bank owned properties. For example, you can’t negotiate the price based on the condition of the home. In some cases, the former tenants or owners may have been destructive with the property before they left, or vandalism may have occurred in the interim.

You can choose to make your offer for a bank owned property contingent on things like an inspection, sale of your current home, financing, and an appraisal. Understand, however, that if there are several offers the ones that have the fewest of these kinds of contingencies will probably rise to the top of the consideration. You need to balance the risks against the necessary contingencies.

If you’re in the market for a new home, bank owned properties may be a good option for you to consider.  A convenient service for Michigan homebuyers can be found at AccessHomeListings.com.  Potential homebuyers can get FREE 24/7 “mobile” access to real-time MLS property information. Check it out!