Mortgage giant Fannie Mae has been busy with more changes.  In a world of tighter lending, it’s nice to see changes designed to ease the home buying process.

In a recent change, Fannie Mae announced they will allow homebuyers to use gifts for their entire down payment regardless of the amount.  This recent change allows buyers to use conventional loans in place of FHA when using a gift for a down payment.

Or does it?

Every Private Mortgage Insurance (PMI) company I’ve contacted still requires non-gifted down payments from the buyer, which conflicts with these new Fannie Mae rules.  Fannie Mae requires mortgage insurance on all loans with less than a 20% down payment.

PMI companies have set their own guidelines that don’t always match Fannie Mae’s.  To be approved for a loan with less than 20% down, you must fit the guidelines for both Fannie Mae and the PMI company.  If you fit the guidelines for one but not the other, you’re loan application will be denied.

The best example I can give is this:

Pretend a young college graduate gets new job with a great salary but has 10 speeding tickets.  He goes to a local Porsche dealership to purchase a new sports car.  He’s approved for the loan but he’s turned down for auto insurance due to his driving record.  The lender will not issue the loan unless he can obtain an insurance policy.  Since he cannot get insurance, he can’t buy the car.

The same applies here.  It doesn’t matter if Fannie Mae says you’re approved under these terms because you can’t get PMI for the loan.

Once again, it’s FHA to the rescue.  Since FHA loans issue their own mortgage insurance, there’s no conflicting rules to deal with.  If you qualify for the loan, you qualify for the mortgage insurance. 

Perhaps the PMI companies will follow Fannie Mae and change their guidelines but don’t count on it.  I recently spoke with a representative at a large PMI company about this topic and they told me, “We have found that this makes the borrowers better long term homeowners.”  I believe this statement to be true if we’re discussing zero-down loans, but receiving a gift is totally different.  Government backed mortgages, such as FHA, VA and USDA have allowed gifted funds for years.

I’m not hear to jeer the efforts of Fannie Mae.  I believe its a step in the right direction and I applaud their effort.  That said, it sure would’ve been nice if they asked the PMI companies if they were on board before wasting their time.

Homeowner’s insurance is a mandatory part of the home-purchasing process.

It’s also one of the least considered.

Lenders require prospective borrowers to secure a home insurance policy to cover at least the value of their mortgage. Homeowner’s insurance isn’t included in the mortgage, which means buyers are on their own to get coverage.

But what usually happens is the lender points the borrower to a specific insurance company (typically because there’s a referral relationship in place). The vast majority of borrowers, bent on finishing the home-buying process, jump on that first contact in a rush to move forward.

And that’s not exactly a recipe for savings.

The reality is it’s important for borrowers to take a little time to comparatively shop and get insurance quotes from multiple sources. You can get a free insurance quote from a host of reputable websites and aggregators, including NetQuote and InsureMe.com.

Granted, it’s probably the last thing hurried borrowers want to do with a home purchase in sight. But parsing through multiple quotes and creating some competition can save homeowners more than $1,000 per year, depending on the policy.

In fact, one of our loan officers recently purchased a home. He solicited five quotes for homeowner’s insurance and found a range of $500 from the lowest to the highest, all for the same scope of coverage.

And it’s not just a money thing — getting multiple insurance quotes can also lead to better terms and coverage plans.

In the end, your lender’s suggested insurer might have the best deal. But you won’t know until you start asking around.

That extra $50 or $90 you could save every month in homeowner’s insurance costs could knock off a decent chunk of your mortgage through additional payments to the principal balance.

Image: woodleywonderworks

Property values can be great fodder for everything from smiles to frowns and on rare occasion even lead to shouting matches. Understanding the procedure in estimating value is crucial to understanding how the components of value establishment work together. As in any science there is a protocol to aggregating, evaluating, calculating, and disseminating information which leads to the opinion of value and in real property appraisals the outcome is sensitive to say the least.

For the sake of this short article let us try and follow real estate appraisers who have thousands of hours as apprentices, hundreds of hours of classroom training and are under constant scrutiny by every party involved to a transaction in addition to governing boards and regulators. We will make use of available services like Zillow to help us easily find properties to which our property will be compared for sales value.

Appraisers supply their full report to the client’s lender on a form called the Uniform Residential Appraisal Report (URAR) which is Fannie Mae’s form 1004 for single family homes and a 1007 for condominiums. It is a standardized report which loan officers and underwriters are trained to read and comprehend because the valuation determined by the appraiser is crucial to the loan to value of the mortgage. This valuation is determined primarily by recently sold properties, similar in construction and size, called comparables. Industry insiders generally refer to these as “comps”.

Every URAR should have at least three comps and appraisers who take the time to return five or six comps are doing everyone a favor. As you may imagine it can be more difficult to find recently sold properties similar in construction and size in rural areas than it is in suburban areas with larger neighborhoods. In fact lenders and appraisers occasionally become at odds with one another over the lack of acceptable comps in rural markets.

Comparable Sales on Zillow

TIP 1

Finding comparables in suburban areas is relatively simple even for the novice. While appraisers have access to powerful database programs like RedLink the novice user can visit Zillow.com to find recently sold properties in the market area of the subject property. In the image to the right are three properties, close in distance and similar in construction and size to our subject property.

You may also perform a simple search engine search on the property address. Using your favorite search engine like Yahoo! simply search for the address of the subject property. This generally returns information which can be valuable in your investigation. One of the results generally returned in a Yahoo! search is a map of the location along with a list of local businesses, schools, houses of worship, government facilities, and other points of interest. Perhaps you will discover your property of choice is in the back yard of a federal prison.

TIP 2

One of the most important factors of using recent sales for comps is the sale date. Every lender wants to see sales within the last six months, will accept sales in the last 12 months and requires a good explanation for using sales older than 12 months to establish values. The image is from Zillow and is found simply by searching on a property address for any property.

Almost as important as the sales date is the distance from the subject property. To establish the most accurate value we cannot skip over recently sold properties to get to other properties with a sales price better supporting our goals. In any event lenders prefer sales within one mile of the subject property. Once again it stands to reason this is simpler to achieve in suburban areas than in rural areas where homes are often miles apart.

Note the number of bedrooms, bathrooms, square footage, year built, and other features mentioned in the comparable sales report. You may click on the Zillow link for each recently sold property to find even more information about the comparable to make sure it is the best comp for your purposes.

TIP 3

Now that you have your comparables you should do a little more investigation to make sure these are the most reliable comps to your subject property. Almost every county in the nation now has their county tax records online. While tax records are not reliable for transaction purposes they may provide information valuable to you in your investigation. Even if they are not online a quick visit to the county records department will help you find the tax assessor’s value and notes on the properties in question. Assistants are on hand to help you in your research.

TIP 4

Since you know the property address do yourself a huge service and do a visual inspection of the site. Generally in neighborhoods with a Home Owner’s Associations you will not find too many surprises about the condition of the construction but you may see properties which look identical on paper are completely unmatched where the site (lot) is concerned. If home A is on a clear lot with a gently rising slope and home B is in a valley where you only see the roof from the street that is going to make a difference in the sales worthiness and value of the property.

During your visual inspection journey you may also find other evidence which may help better support the value of your subject property. You may see a for sale sign in the yard of a similar property with a “sold” rider on it. This information could be highly valuable as it may only have been recorded in the last few days meaning it did not show up in your initial search. More recent sales means more accurate value. Take notes as you drive about everything from condition of the neighborhood to proximity to commercial and industrial zones.

Remember, your appraiser can only view the inside of the subject property to see what improvements have been done to the interior. Things like new imported marble hearths and cut stone counter-tops may be inside those other properties where the subject property has no hearths and laminated counter-tops.

TIP 5

Understanding the comparables selected by a professional appraiser is simple. Since they all use standardized procedures in valuation you can easily follow along with what they have done to establish the values of the comps. While there are multiple methods appraisers use to establish value we are generally going to see the Sales Comparison Approach. Other methods include the Cost Approach and the Income Approach which are beyond the scope of this article.

In the Sales Comparison Approach the appraiser looks for values just as we did in tip number one. In reality they have much more experience and a powerful set of tools used to help in their search but nevertheless are looking for the same things we did: recent sales of similar properties. The appraiser uses a part of the URAR referred to as “the grid” where she records her findings. In the grid will be somewhere between three and six properties listed by address and physical attributes. At the bottom of each column will be adjustments for improvements, age and other factors.

Properties in the grid on the report which require the least amount of adjustments are considered to be the “most similar”. These properties are given the most weight in value comparison in most cases. You may see properties with value adjustments over 10% the lender may ask for further explanation or an additional comp even if it means a slightly older sale or increased distance.

Summary

While these five tips will help greatly in understanding how comps are sourced and used this article only scratches the surface. Continue your education by reading some of the appraiser’s posts on Zillow and around the Internet. Valuation is a highly important subject which cannot be fully mastered in just a matter of moments yet this article should have supplied the reader with enough thought starters to continue their research and find the answers to their questions. Remember we did not cover important information such as the value of subterranean space to above ground space, how to determine what makes a room a bedroom or the value of property improvements like pools, detached garages and landscape construction.

So now, apropos of the foreclosure mess, which we addressed last week, Sheila Bair, the Chairwoman of the Federal Deposit Insurance Corporation (FDIC), comes forward with a proposal that is so radical it just might work.

First, let’s set the scene, in case this is the first you’ve heard of Foreclosure-Gate.  Banks are trying to foreclose on homeowners that are delinquent in their payments.  But one of those curious things about the law is that whoever forecloses on a property must have standing to do so, that is, he has to prove that he owns the property that he is seizing.  It appears, however, that some banks have been less than candid about their standing.  They should have it; they’re doing the servicing, after all.  But sometimes they can’t prove that they are legally entitled to foreclose, because, in point of fact, the title never registered their claim.  The system that was supposed to take care of this is the Mortgage Electronic Registration System, or MERS.  It, um, failed.  And failed.  And probably is still failing.

That leaves the chain of title in doubt and makes it very hard to foreclose.  The banks circumvented this difficulty in the good old American way – they lied about it.  The coursts were not amused.  And now the attorneys general of all 50 states are ginning up a class-action lawsuit to try to get lenders back for this.

Get them back for what is not clear, because there are maybe six reported cases – nationwide – of a lender foreclosing on someone that really wasn’t behind on his mortgage, and those situations are fairly simply remedied by the parties involved.  The real-estate market in the US is not what one would term “robust” at the moment, and the prospect of a gigantic class-action lawsuit, coupled with the blizzard of punitive follow-on lawsuits (this is America, after all) has the very real prospect of bringing the market to a halt altogether.  If lenders have to retask all their personnel to handle lawsuits, that, coupled with the dramatically increased risk of not being able to foreclose at all on any of their loans (this is what Senate Majority Leader Harry Reid, among others, is calling for), is going to dry up the feeble trickle of mortgage money we now have.

Ms. Bair sees this clearly, and has a solution: modify the mortgages.  Well, we are, say the lenders.  No, you’re not, says Madam Bair, and she’s right.  Banks have not been modifying mortgages at nearly the anticipated rate.  And Ms. Bair has a couple of other data points to provide.  The FDIC owns several banks, and has been working out modifications on its own on behalf of those banks.  In the cases where the modifications have resulted in a 10-40% reduction in the monthly payment, the default rate has been halved, she says.

Think of that!  Reduce the homeowner’s payment, and he doesn’t default on his loan as often.  This is so amazing (in my family, we say amazingcastic, just in case anyone misses the sarcasm) that only the government could possibly have figured it out.

As goo d an idea as this is, there are a couple of problems with this idea of Ms. Bair’s.  The first is more of a hurdle that can be jumped with the right incentives.  That is that the mortgages themselves, as we noted here, are of dubious and often multiple ownership.   Not only do we have to figure out how to identify the owners, we then have to get them all to agree to modify the note, which is the security that the ownership is based on.  Not an easy task, though presumably possible if the incentives are correct.  But that brings us squarely to the second problem, and that is that the incentives are screwed up.

Banks could already have been modifying mortgages by the basketful if there were solid incentive for them to do so.  But that incentive is lacking, in most cases.  The government’s mod plan is cumbersome and weak, with incentives that are far too small to move most lenders to action.  Adding to that, the government – specifically the FDIC – requires a certain asset book from each lender or it will be “stress-tested” out of existence.  The assets on that book consist largely of mortgage notes.  Modify the notes, reducing their value, and the FDIC has the ability to swoop in and declare you bankrupt.  That’s not an incentive to acquiesce to Ms. Bair’s request.  On top of that, the government has all-too-often indicated that it will step in and bail out the banks if they lose money because of foreclosures.  Fannie and Freddie, VA and FHA already own 90% of the US market for mortgages, and that group can always tap the taxpayers if it gets in trouble.  So why modify?

It might be moot anyway. Here’s the quote from the attorneys general in response to Ms. Bair:

Our group of attorneys general and banking regulators is currently looking into the foreclosure problems that have come to light.  In addition to our active inquiries with servicers and lending institutions, we are engaged in extensive dialogue.  We will continue that dialogue with those inside and outside of our multistate group to ensure this process is both thorough and expeditious.  We intend to be fair to consumers, lenders, and investors, and continued input and dialogue will help us attain that objective.

Anytime you say the word “dialogue” three times in one paragraph, you’re spinning.  Let me translate that quote for you, as I speak politics fluently:

We’re elected officials.  Most of us are up for election this year.  We’ll sue the living snot out of you if it will help us keep our jobs.

Despite all this, I wish Ms. Bair well.  I’ve been calling for an across-the-board principal reduction, as a gift from the lenders to the homeowners, as a way of eliminating “strategic foreclosures” (where the homeowner can make the payments but walks away because he doesn’t want to, usually because he is upside-down in the house).  Ms. Bair’s proposal along with something like that would reduce foreclosure rates by as much as 65%, and put a serious floor under the housing market.  It would mean a freeing up of hundreds of billions of dollars of trapped capital in homes that are currently underwater, boosting purchasing power and pouring more billions into consumers pockets (not, this time, government billions, which it has to take from consumers anyway) at a time when that is sorely needed.

Will the proposal founder on the twin rocks of politics and regulatory constriction?  Will you ever have a lender call you and say, “you know, let’s see if we can make this mortgage thing work a little better for both of us”?  Well, we’re coming into the season of miracles.  What better time to see one in housing?

At the very least, if you’re a homeowner that is behind on the mortgage – or even threatening to be so – you ought to call your lender and “dialogue” with them.  It appears that they have new incentive to talk with you.  And we’ll keep you posted here as all this develops.

Today’s Mortgage Definition is: Primary Residence

Primary Residence — A Simple Definition:

When getting a mortgage, one of the factors that will influence the rate and terms of your loan is whether or not you will occupy the property as a primary residence.  Generally speaking, the best deals on mortgage terms are available to people who are going to occupy the property as their primary residence. Also, generally speaking you can only have one FHA insured loan at one time.

Primary Residence — An Expanded Definition:

When getting an FHA loan, it is generally not possible to have more than one FHA loan per borrower.  Anyone who owns a home (either alone or with someone else) that is insured by FHA generally can’t get another FHA insured loan except under the following circumstances:

Relocation – if you are relocating to another area that is not within a reasonable commuting distance from your current home, you can get another FHA loan without being required to sell your existing home that currently has FHA financing.

Increase in Family Size – You can get another home with an FHA loan if you have an increase in the number of legal dependents where your present house no longer meets the family’s needs.  If this is the case, you must pay your current FHA loan down to 75% LTV and a current appraisal must be used when determining the 75%.

Vacating a Jointly-Owned Property – If you are getting divorced and are moving out of your house that is currently financed with an FHA loan, you can get another FHA loan if you can qualify for it financially.

Non-occupying co-borrower — A non-occupying co-borrower on a property that is being purchased with an FHA-insured mortgage as a primary residence by other family members.  This is often the case with what is known as “FHA kiddie condo loans”.

Primary residence.

It matters whether the property you are buying is going to be your primary residence or not.  When getting a conventional loan, it matters for the rates and terms of the loan and when getting an FHA loan, it often matters whether or not you can get a loan at all.

Zillow.com has recently launched a new research site under the leadership of Chief Economist, Stan Humphries. The site features a blog and a dedicated section for industry briefs.

In a recent brief by Zillow Data and Analytics specialist, Steve Brownell, data was analyzed from the Zillow Mortgage Marketplace (ZMM) that revealed one third of Americans are “Highly Unlikely” to qualify for a mortgage.

The data was collected and analyzed from 25,000 loan quotes from ZMM. The detailed brief that features an interactive table, was picked up by over a dozen major media outlets including, Time, CNBC, The Balitmore Sun, The Wall Street Journal and others. The brief shows the impact of credit score on LTV (loan-to-value ratio) on APR.

The analysis places examples of two different buyer profiles side by side, the visualization table allows you to find a table cell near your own scenario and interact with the tables to show the impact of your APR based on credit ratings and LTV.
Maybe data isn’t that boring after all .

There are a lot of reasons to refinance a home, and a lot of reasons (probably the same number) NOT to do so.  Mortgages Unzipped has provided a good number of analyses recently, including really good ones from Evan Vanderwey and Ken Cook. This post isn’t meant to explore all of the reasons, just to offer one possible calculation for those out there that are hesitant to refinance because doing so 1) resets your mortgage to 30 years again and 2) sticks another dollop of closing costs onto the loan.  Maybe it’s because I do lending in Utah, but it seems that for many people these days, their fondest dream is not to have a mortgage at all.  That’s fine, and I encourage my clients to think that way.  That does not mean, however, that you shouldn’t refinance.

Instead of looking at your loan as a new set of requirements, look at how to fit your new loan into your current requirements.  Stay with me here.  This is going to require you to do some actual forward planning.  But it won’t hurt much, I promise.

First, figure out when you want your home paid off.  Yes, put an actual date on it.  If your 30-year mortgage closing was in October of 2009, that means that you’ll pay the loan off more or less in October of 2039.  Sound like forever?  Okay then, shorten the time.  Put that date anywhere you like.  At this point, it doesn’t matter.

Second, now that we have a date, we have to figure out what payment pays the loan off on that date.  Alternatively, we have to figure out what lump sums at what points will pay the loan off on that date.  The earlier additional funds are paid on the principal balance, the greater the impact those funds will have.  There are excellent calculators out there that can help you do this math.  For instance, on a $200,000 loan, if you want to cut your 30-year, 5% loan down to 18 years, you pay an additional $316/mo, and there you go.  You can accomplish the same thing by putting $3500 down every year in a lump, plus $5000 right at the beginning.  And so on.

NOTE: You’re thinking this is backward.  You’re thinking that what you should do is figure out how much money you can put toward your mortgage, then see how fast it will be paid off.  And of course you can do that, but I wouldn’t.  This is not how savvy people do this calculation.  They know that if they have a target to hit, they’ll move Heaven and earth to hit it.  So they set a date, then they figure out how to arrange things to make that date.  This process makes it much more likely that the plan will work.

Third, now that we have the payoff date set and the payment calculated, let’s find out if the refi gets us to that date faster, or with less cash expended.  Using the same scenario above, the current loan already has a low interest rate, and it has already been paid for 11 months.  That’s an advantage for the current loan.  However, what happens if you refinance it to the current rate, say, 4.5%?  The principal balance after one year is about $197,000.  We’re going to add $5000 in closing costs to that, making it $202,000.  Since you’re looking to pay off, not to drop your payment, we’re going to take the payment you skip (all refinances have a payment skip built in) and pay it as a principal reduction on the new loan.  That drops our principal to $200,900.  Then we have monthly payment savings of $56/mo (from reducing the interest rate).  Doesn’t sound like much.  But over time, it is the difference-maker.  If you target your 18-year payoff, as above, you can pay $30 less per month and still hit it.  If you keep the payments at the same level, the refinanced loan pays off one year sooner and saves you $10k in interest.

And that means (in this case) that you should refinance, if your goal is to get to zero in the shortest time, with the least cash expended.

Now, you can do these calculations yourself, but I wouldn’t.  Your mortgage professional – you do have one of those, right? – can do those numbers in seconds, while you’re doing what you do for a living.

If you need to lower your payment, then this calc won’t help you.  But for those that are aggressively seeking zero, as we say, this is a handy way to figure out how best to get there.

Photo Credit: RambergMediaImages

Consumers should be aware in obtaining a new mortgage there no longer exists the “exceptions” prevalent in the recent past. Today’s mortgage banking landscape has lenders approving loans with fine tooth accuracy. In many cases they are adding overlays before approving a deal. When a lender approves and funds a mortgage, the loan typically gets sold on the secondary market within a few days. Loans under go a “post closing” process. A post closer reviews the file to be certain all conditions required by the investor are met and documented.

What happens if a good file is missing a few docs? Consumers have no impact as the closing is a binding contract. The impact to the lender is a different story. It is why they can become overly cautious when approving loans. After a post closer delivers a closed loan package to their investor for purchase, the loan file is yet again examined for standards and compliance. If for any reason the investor feels something is missing they can decline the purchase. Let’s say the lender has 4 loans in the pipeline that average $400k each. If the investor refuses purchase it has become problem in excess of $1,500,000.00. Lenders have a limited capacity for credit. Until loans are purchased by their investor these deals remain on the lender’s credit line. The backlog could easily prevent the funding of other loans.

Is it really that difficult? In most cases it shouldn’t be. Things have become more difficult of late for bankers and consumers alike. Working in harmony with your lender will significantly ease frustration and make the process as smooth as sailing on calm waters.

What can you do to help? First and foremost, understand your loan will be documented much more than any loan you’ve had previously. There will many more documents and requirements. Be prepared.

1. Don’t buck the system – In other words, "Just Do It". If your loan officer requests a document that you feel is unnecessary because you’ve never provided it before, just do it. Bear in mind the aforementioned "overlays". Banks and lenders want to be certain the file is as “tight” as possible. If an underwriter is asking for a document, just do it. The days of arguing underwriter conditions are over.
2. No New Credit or Large Purchases – New guidelines call for lenders to pull credit once again just before your loan is scheduled to close, even after the loan is approved. Federal law states consumers must wait three business days after a refinance closes before the loan actually funds. Lenders can will pull a new credit report during this period. Any new debt or credit inquiries may kill or delay your closing. The same goes for employment. Do not quit your job while getting a mortgage. Lenders will call your employer for a final verbal authorization before funding. Changes in employment will kill your deal.
3. Disclose everything. Anything at all you believe could have a negative impact on your loan must be disclosed during the application process. Gap of employment? – Make sure you explain it. Verification of employments are done on every single loan. If there is a gap of employment, lenders will find it. Disclose and document up front. This may not be a deal killer but without disclosure, it will raise a red flag. Other issues to bring up would be: alimony, child support, loans from your 203k, wage garnishments, existing judgments or liens, 2nd mortgages and lines of credit an other people on the title with you. Be sure to add pretty much anything else common sense would dictate as a potential issue to underwriters.
4. Home values may insult you. Many consumers take it personally when an appraisal comes in much lower than expected. If the deal still works with the low appraised value – just let it go. The object of your financing is to accomplish the deal based on the loan proposal you approved. I have seen too many clients argue about an appraisal that has no affect on the outcome of the loan. If a low value does not alter the outcome of your loan don’t fret, move on and close the loan.
5. Time is of the essence! Mortgage rates are locked by number of days expected to close, fund, record and deliver to the investor. When a loan is agreed upon between consumer and loan originator and becomes a locked loan, the clock starts ticking. Be prepared with necessary documentation and begin the process immediately. If your loan does not close within the lock period it could cost in extension fees. When you make a commitment to a mortgage move quickly to supply requested documents.

Bonus Smooth Sailing Tips -

These documents should be part of every loan package and as new documents get updated should be forwarded to your lender:

• 30 days most recent pay stubs – continue to forward any new pay stubs received during the loan process.
• 3 months bank statements – ALL pages, even if some pages towards the end of the statements are blank. Internet statements many times are not acceptable because consumers names and or complete account numbers are usually not complete or missing.
• Sign all disclosures supplied by your loan officer. Believe it or not, a missing signature not found until your loan file hits the closing department can stop your deal in it’s tracks. Be thorough when reviewing your loan disclosures, be certain to sign and date all documents and call your loan officer if you have any questions or concerns before signing.
• Gather your homeowners insurance information including your agent’s name, phone number and policy number. A declaration page is typically sufficient.
• Find your last settlement package which includes the hud settlement sheet, note and title policy. These items may come in handy during the loan process and could possibly even save you money. If you have the original title policy when you purchased your home, send it to your lender as they may be able to get a discounted reissue rate on title insurance.

Bottom line – The mortgage market is much different than ever before. Educate yourself and communicate well with your lending professional. Loans are still getting approved every day! It’s starting to sound cliche, but it’s true, "rates are at historical lows!"

Photo Credit: Joey Gannon

Can we measure the economy based on a football game?

Are you a diehard football fanatic?

Can you fathom the thought of not watching your favorite team on TV?

Blackout restrictions are in place between NFL teams and their local television markets. If the game sells out it is on TV. If the game is not a sell out, local fans become “blacked out” of signal and cannot watch their teams play. Or in other words, it will no longer be televised on your local network. NFL rules state a game must be sold out 72 hours prior to kickoff.

NFL ticket sales have been down for the past three years and it looks as if this year may be the worst yet. According to USA Today at least 11 NFL teams could be facing blackouts as franchises fight through a downward trend of stadium attendance. Last year the league had 22 blacked out games, a five year high.

Today’s economy has many consumers ultra focused on spending habits and an increasing number of consumers with no disposable money available. Maybe NFL franchise owners have priced themselves out of consumers comfort zones and now the economy will force ticket prices and the overall stadium experience back in place. Maybe consumers are at fault for paying the asking price for season tickets and supporting team revenue by shelling out for concessions and team jersey’s and such.

Tampa Bay Buccaneers: Blackouts likely.

Jacksonville Jaguars: Seven blackouts last year.

Oakland Raiders: Seven blackouts last year.

Detroit Lions: Four blackouts last year.

Can football tell us anything about the economy?

Let’s see… the cities above located in California, Michigan and Florida… States which just happen to lead the country in foreclosures. And the NFL expects it to get worse this year. I for one think this is a very viable measurement on the state of our economy. Just examine the statistics of the number of TV blackouts for NFL games and come to your own conclusion.

In fact, if you really want to feel the pulse of the economy, ask the following shops you patronize how’s business: your favorite restaurant, your cleaner, your car dealer, your real estate agent, your neighborhood pub, your car mechanic…. get my point?

And now for a shameless plug. Go Redskins! By the way I did not renew my five season tickets this year for the first time in a decade. The Skins priced me out of the market.

Effective for FHA loans for which the case number is assigned on or after October 4, 2010 the Upfront Mortgage Insurance will decrease from 2.25 to 1.00 (100 basis points) on most FHA insured loans except Home Equity Conversion (HECM – “reverse mortgage”). Chances are you have heard this or some version of it but until yesterday, September 1, 2010, it was not in writing in the official form from HUD.

When are FHA case numbers assigned?

Case numbers must be assigned prior to ordering third party services such as the appraisal. Appraisals are not ordered until there is a fully executed sales agreement in the lender’s possession. The lender orders the FHA case number and assigns it to the loan application where it becomes permanent record.

Monthly Mortgage Insurance also changing.

With UFMIP going down MMIP is heading up. Much more dangerous to the industry because it impacts monthly payment and thus debt-to-income ration (DTI). Currently on loans of over 95% the MIP is .55% annually and from 95% and lower it is .50% annually. Effective October 4, 2010 those numbers will be .85% and .90% which results in an increased monthly payment.

Contrary to some reports there has been no notification of change in the amount of closing contributions by the seller which can be contributed to cover closing costs which is 6% and has not (yet) changed. The buyer must contribute 3.5% of their own money but it can be a gift.

This information applies to 203b and 203k loans.

Examples – top row is now, second row is after 10/4 and the $43.39 is the monthly payment increase:

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