Update 08/13/2008
Nehemiah Corporation of America announced the launch of www.DPAGroundSwell.org, a web-based community established to mobilize the growing industry opposition to the October 1 ban on seller-funded downpayment assistance (SF-DPA).

This site enables visitors to directly contact local representatives and offer support for a bill introduced by Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays on July 31, 2008, that would reinstate SF-DPA.  If passed and signed into law, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) will allow downpayment assistance to continue indefinitely.

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UPDATE, 07/31/08
a new bill, The FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 was introduced by several members of Congress on Thursday, July 31, 2008.  Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays sponsored this bill that if passed and signed into law will allow downpayment assistance to continue indefinitely. “Maxine Waters, Gary Miller, Al Green and Christopher Shays have demonstrated the willingness to understand all sides of this issue and the courage and leadership to follow their conscience.  All those who understand the importance of working class American’s having their shot at homeownership, need to work together to encourage our elected officials to pass this bill.” 
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Click here to help and contact your local elected officials, http://capwiz.com/nehemia/issues/alert/?alertid=11598811

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Go to this website:
http://www.rallyforhomeownership.org/

..form will go to your local Congressmen and Senators.
CONGRESS MET ABOUT THIS JULY 23rd

HUD has reissued its rule to ban seller-assisted downpayment assistance programs and the charitable organizations that make homeownership a reality for thousands of families across the United States.

• Many Americans would be unable to buy a home

• The government would spend your taxpayer dollars to replace DPAs

• There would be fewer homeowners to add to the tax base and improve communities

• No mortgage options for people who can afford a monthly mortgage payment but do not have enough saved for a downpayment

• The struggling housing market would be negatively impacted

• Sellers would suffer from a smaller pool of potential buyers

MORE ON THIS STORY IN THE WASHINGTON POST

The recent credit tightening due to the “credit crisis” in the U.S. has seen thousands of mortgage companies go out of business and so many loan programs no longer available.  145 mortgage licenses were cancelled in the state of Virginia just last month.  Below I put together a list of programs that are still available.  Over time I expect we will see more creative mortgages become available, maybe never to the extent that we witnessed a couple of years ago, but definitely more than the current loan options.

FHA and Down Payment Assistance program
The sub prime market is virtually non-existent.  FHA, which was barely used in recent years, is now a vital outlet for borrowers.  Flexible guidelines, little money needed, and recently raised loan limits…  It is almost the only option for borrowers with lower credit scores and/or very little money saved.

FHA can also serve to get a borrower into a home with no down payment at all and no money for closing costs at settlement.  It involves the Down Payment Assistance program which is a gift from the Seller.  In this market with so much inventory available, it is not difficult to find a Seller willing to pay this gift and all closing costs for the borrower.

VA
For veterans and military personnel, this is probably the best option out there if you are eligible.  100% financing is available at a great market rate.   No mortgage insurance is required, which keeps the total payment very low for a $0 down mortgage.

GRH USDA
Guaranteed Rural Housing program is available for properties in rural areas.  No MI (mortgage insurance) is required on this loan either.  Current maximum loan amount is the conforming limit of $417,000.

OFFICER NEXT DOOR | OND
Police Officer next door program is made available by HUD so law enforcement may purchase a Hud home at half price.  If the police officer uses fha financing for this purchase he/she will only need a downpayment of $100 and can finance the closing costs into the loan.

TEACHER NEXT DOOR | TND
This works like the above Officer Next Door program.  Contact us for a list of Hud homes in your area and to get preapproved for the fha mortgage.

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NO CLOSING COST REFINANCE
Yes, rates are still low enough where a no closing cost refinance still makes sense.  Many borrowers can lower their rate slightly not pay any closing costs.  No, closing costs are not “rolled” into the new loan.  These programs do offer a slightly higher rate, and that is how the lender is able to pay these actual costs for you.

MY COMMUNITY
The My Community program was extremely popular just a short while ago.  As the market changed this program was still available but Mortgage Insurance companies were no longer underwriting them at 100% financing.  The bare minimum went to 5% down.  The mortgage insurance can be expensive with this program and right now it makes sense to go FHA instead in most cases.

INTEREST ONLY
Interest only loans are still available.  They received such an undeserved bad stigma once the market changed for the worse.  It was 100% financing combined with a 2 year adjustable rate, combined with the option to pay interest only…  that led to so many borrowers not being able to afford their homes when 2 years was up.  It’s when homes stopped appreciating that these loans blew up on lenders.  They can still make a lot of sense for borrowers who understand them.  The borrower is still allowed to make a fully amortized payment on these loans.

ARM
Adjustable Rate mortgages are still popular and still a great option to a higher fixed rate.  The most popular currently are the 3 year and 5 year ARM’s.  There isn’t enough spread between the 7 and 10 year arms and a fixed rate.  An ARM is also available through fha.  The caps are usually 1/1/5.  Conventional arms caps are typically 2/2/6.

HELOC
Home Equity Line of Credit, also known as a Home Equity Loan… is a second mortgage.  The most popular are tied to the Prime Rate.  Whenever prime changes, your rate will change.  This option is called a “heloc”.  The other option is a fixed rate second, which offers a higher fixed rate.  You have to borrow the whole amount at once and make payments based on it.  A Heloc is so advantageous because you can get a 100k line, but only take out what you need.  This way your payments are only based on your outstanding balance.  You also have the option to pay interest only, which makes your payment incredibly low.  It’s usually a tax write-off and it makes sense to use it to pay off any higher rate debt you may have.

REHAB
Rehab loans are set up a lot like construction loans and usually offer a 6 month construction term where you can make interest-only payments.

CONSTRUCTION
Financing when you have the land and want to build a home.  Construction phase is usually interest only, and then converted to a permanent rate at completion.

MULTI UNIT
Whether it’s a 3 unit Multi-family dwelling or a 50 unit apartment building, we can help you with the financing.  If it’s 5+ units, make sure you complete the commercial application and then the standard 1003. Both are needed.

REVERSE MORTGAGE

FORECLOSURE BAIL OUT
You will need a minimum of 30% equity for us to help.

Making a case for the inclusion of foreign income that is not subject to U.S. tax
- Facts and editorial/opinion

BACKGROUND:
One of the two borrowers works in Dubai and gets paid in a foreign currency.  That currency is pegged to the US dollar, so there can not be any fluctuations in value.  However, this loan was denied by another lender because of the fact that the borrower was paid in a foreign currency.   The guidelines don’t mention this issue.
UNDERWRITER:
Borrowers must earn income in US dollars and report US taxable income. If the borrower is paid in foreign currency, those checks are only cashed in foreign currency and not US dollars, therefore making the income ineligible.
Dubai currency pegged to US dollars is really not any different than Euros or the Mexican peso – it is just pegged at an exchange rate. Has nothing to do with the taxability of the earnings by the IRS.

MORE BACKGROUND:
Borrower is a US citizen and files US taxes reporting everything she earns overseas.  Much of that is not taxable under US tax laws but it all gets reported to Uncle Sam.  Also, the difference b/t a currency being pegged to the US dollar verses something else, like the Euro for example, is that a currency fluctuation will never change the borrower’s actual earnings.  For example, if the borrower makes the equivalent of $50,000 US dollars then even if the value of the dollar increases, if that foreign currency is pegged to the US dollar, our borrower still makes $50,000 US dollars.  If that currency were the Euro, then that $50,000 turns into something less as the dollar increases in value relative to the Euro.  Similarly the Euro could decline in value against the dollar, this would also reduce the borrowers actual earnings - that can’t happen if the currency is pegged to the Dollar.    I’m not sure if any of this makes any difference for purposes of FHA insurance, I just thought it to be a substantial distinction.
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UNDERWRITER:
Income for qualifying purposes must be taxable and be part of the AGI on a persons’ tax return. Paying taxes on US income is fundamental to the nature of  Federally insured FHA mortgages.  The section below provides examples of allowable income. You will NOT see any exception to “add back” non taxable compensation. As for the currency exchange issue, I understand the Dubai $ is fixed to the  US dollar as opposed to the Euro, etc . But  it is still not relevant to US taxable income.Income must be taxable in the US and not just reported as foreign earnings on a supplemental schedule on a tax return. Think of it as a borrower making “off the books”  income or illegal income. It cannot be used if no taxes are paid on it.
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4155.1 REV-5 business shows a significant decline in income over the period analyzed is not acceptable, even if current income and debt ratios meet our guidelines. There are four basic types of business structures: sole proprietorships, corporations; limited liability (”S” corporations); and partnerships. Each type requires slightly different forms of analysis. The following provides additional information on analyzing tax returns: 1.
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Individual Tax Returns (IRS Form 1040). The amount shown on the IRS Form 1040 as “adjusted gross income” either must be increased or decreased, based on the lender’s analysis of the individual tax returns and any related tax schedules. Particular attention must be paid to the following: a. Wages, Salaries, and Tips. An amount shown under this heading may indicate that the individual is a salaried employee of a corporation or has other sources of income. It also may indicate that the spouse is employed, in which case the income must be subtracted from the adjusted gross income in the analysis. b. Business Income or Loss (from Schedule C). The sole proprietorship income calculated on Schedule C is business income. Depreciation or depletion may be added back to adjusted gross income. c. Rents, Royalties, Partnerships, Etc. (from Schedule E). Any income received from rental properties or royalties may be used as income after adding back any depreciation shown on Schedule E. d. Capital Gain or Loss (from Schedule D).
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This transaction generally occurs only one time, and it should not be considered in determining effective income. However, if the business has a constant turnover of assets resulting in gains or losses, the capital gain or loss may be considered in determining the income, provided the borrower has at least three years’ tax returns evidencing capital gains. An example includes an individual who purchases old houses, remodels them, and sells them for a profit. e. Interest and Dividend Income (from Schedule B). This income, which is taxable and tax-exempt, may be added back to the adjusted gross income only if it has been received for the past two years and is expected to continue.
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October 2003 2-21 4155.1 REV-5 (If the interest-bearing asset will be liquidated as a source of the cash investment, the lender must adjust accordingly.) f. Farm Income or Loss (from Schedule F). Any depreciation shown on Schedule F may be added back to the adjusted gross income. g. IRA Distributions, Pensions, Annuities, and Social Security Benefits. The non-taxable portion of these items may be added back to the adjusted gross income, if the income is expected to continue for the first three years of the mortgage. h. Adjustments to Income. Certain adjustments to income shown on the IRS Form 1040 may be added back to the adjusted gross income. Among these adjustments are IRA and Keogh retirement deductions, penalties on early withdrawal of savings, health insurance deductions, and alimony payments. i. Employee Business Expenses. These expenses are actual cash expenses that must be deducted from the borrower’s adjusted gross income.
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MAKING A CASE:
In two separate sections the FHA guidelines seem to specifically permit the inclusion of foreign income that is not subject to US tax. – the guidelines specifically provide for the grossing up of non-taxable income even in the case where the borrower is NOT required to file a US tax return.  See 4155.1 REV-5, 2-7Q, “Non taxable income” which provides, in pertinent part, “If a particular source of regular income is not subject to federal taxes… the amount of continuing tax savings attributable to the non-taxable income source may be added to the borrower’s gross income….  If the borrower is not required to file a federal income tax return, the tax rate to use is 25 percent.” 
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The FHA guidelines specifically state that non-taxable income should be grossed up by 25% even in the case where the borrower is not required to file a US tax return - I am not able to reconcile this with the rationale provided for excluding the prospective borrower from participation in an FHA insured mortgage.  How can this be true if “paying taxes on US income is fundamental to the nature of Federally insured mortgages”? I think FHA  fully intended participation to be open to US citizens regardless of whether their income is subject to US tax. 
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Would you permit a plaintiff in a court proceeding who received compensatory damages for the loss of a family member to be paid out in $50,000 increments annually over the next 20 years to use that $50,000 per year as qualifying income (lets assume that’s the borrowers only income)?  These compensatory damages are not subject to US tax, so the entire $50,000 per year is received tax free with no further US tax obligations (except of course that interest made from the money received would be taxable).  Would we try to exclude this borrower or his income because the $50,000 is not part of the borrowers Adjusted Gross Income?
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–the FHA guidelines make specific reference to the ability of US citizens residing in a foreign country to be a co-signer on an FHA loan.  In discussing co-borrower and co-signer eligibility, Section 2-2A3 states, “Unless otherwise exempted (e.g., military service with overseas assignments, US citizens living abroad), any non-occupying co-borrowers or con-signers must have a principal residence in the United States.”  The parenthetical makes specific reference to the ability of a US citizen living abroad to qualify as a non-occupying co-borrower.  The only way to interpret this rule is acknowledge that a co-borrower living abroad need not have a permanent residence in the US - however one defines “permanent residence” (that is, of course, irrelevant to the issue being considered).  Should our borrower be penalized for taking advantage of a favorable tax rule?
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–Discriminatory consequences based on income levels:  The exclusion applicable to income earned by US citizens living abroad applies only to the first $85,700 - amounts in excess of the $85,700 are fully taxable in the US.  If a borrower makes $200,000 per year, and therefore pays US tax on income that exceeds the 85,700 exclusion, can that person then be a co-signor on an FHA loan because US tax has been paid? I don’t think we can have two different answers for two similarly situated US citizens working and living abroad based on their relative income levels, one answer for the prospective borrower making $50,000 per year and a different and more favorable answer for the borrower making $200,000 per year.  I don’t think that is a distinction HUD would or should be comfortable with.
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–IRS Regulations:  The Tax Code and IRS Regulations don’t support discrimination against US citizens based merely on the exclusion of certain foreign income from taxation.   The first paragraph of the instructions to Form 2555 (exclusion of foreign earned income, link attached http://www.irs.gov/pub/irs-pdf/i2555.pdf ) states the following, “If you are a US citizen or a US resident living in a foreign country, you are subject to the same U.S. income tax laws that apply to citizens and resident aliens living in the US.  But, if you qualify, use Form 2555 to exclude a limited amount of your foreign earned income…”  A US citizen who elects to exclude foreign earned income is for all other purposes treated as a US citizen subject to all other US tax laws.  In fact, if that same taxpayer has income from other sources, when determining the appropriate tax bracket for that ”other income”, the taxpayer must pretend that the excluded foreign income was in fact received, and is therefore taxed at a higher rate on that ”other income”.
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–Exclusion is entirely elective:  The election to exclude the foreign income is entirely elective, it IS NOT mandatory nor is it otherwise required (see “Choosing The Elections” on instructions to Form 2555, link above).  If a taxpayer does not elect to exclude the first $85,700 of foreign income from US taxation, does that taxpayer then qualify for FHA financing (as a non-occupant co-borrower) because US tax has been paid (assume for the sake of argument that total income is $50,000 US dollars in foreign currency)?  If so, should there be a difference between the US citizen who elects to take advantage of a favorable tax law and the one who does not?  I think the answer has to be no, as it would otherwise be tantamount to rewarding someone for their stupidity.   
Contact me to discuss the above or your own loan details
Mark Zaidan, Choice Finance®

You can spend an entire week surfing the different lenders online to research who has the best rate and lowest fees for your mortgage.  Every lender presents their interest rates and closing costs differently.  In fact, many make it very difficult to find their closing costs at all.  They want you to complete an application FIRST.  How frustrating.

Choice Finance® has tried to make this process easier for you.  We are committed to providing the lowest rates and fees, AND availability of most mortgage programs. 
ditech does not do FHA financing.  

Check out the interest rate chart we now post and update at least once a day.  On this spreadsheet we have also provided the links back to the other lenders so you may verify the information we have posted.  Please use this blog to post your experiences with these other lenders so we all may benefit.

ditech
07/07/08– Through the creation of this rate table, I think I found ditech to be the hardest website out of the above lenders to pull a rate quote from.  When I went to their Live Chat to ask where to find rates the response was
“rates are based on details from a completed application, I can give you a call to complete one if you like“. 
To which I replied “im not ready to complete an application. I have excellent credit, im putting 20% down on a 400000 sales price. id just like to see what your rate is for a no points 30 year fixed rate“. 
Ditech responded “0 point loan is at 6.375 today, rate are as low as 5.875% With and APR of 6.23“. 
me:  “thank you. can you tell me your lender fees on the 0 point loan? is it your $395 flat fee?“. 
Ditech:  “no 395 only applies to refinance, purchase fees are at 1450“.  “we currently don’t have FHA financing“.
This was enough info to see ditech was not the best rate and fees on that day.  I find this ironic given ditech’s latest commercials that promote their “transparency” and upfront way of doing things.  I also find it interesting that they charge $1450 on a purchase according to the Live Chat person.  This is also info I could not find on their site.  What you do see throughout their site is a flat fee of $395 promoted. 
Try for yourself and go to ditech’s website.  Please comment on this blog post if you were able to find their rates and closing costs.

Lending Tree
Have you ever inquired with them?  Get ready for numerous solicitations.  If you think you were confused when you researched the different lenders websites, just wait until you have loan officer after loan officer contact you, each with his/her own way of selling their mortgage.  The reason is because Lending Tree is not the lender.  They are the advertiser who charges actual Lenders/Loan Officers to be part of their “lending network” and receive your mortgage inquiry as a “lead”.  A big plus of having the rate spreadsheet we created is to help you put all the info in front of you without salespeople knocking your phone and email doors down.
Choice Finance® loan programs, today’s mortgage options

What are the options for getting the money?
You can receive your money in one of four ways: (1) as a fixed monthly payment either for a set term or for as long as you live in the home; (2) as a lump sum; (3) as a line of credit that has a growth factor which takes into account appreciation in your home and your aging; or (4) a combination of the three.

Does a reverse mortgage affect my current government assistance, retirement benefits or estate plan?  A reverse mortgage does not affect regular Social Security or Medicare benefits.  However, if you are on Medicaid, any reverse mortgage proceeds that you receive must be used immediately, since funds you retain would count as an asset.  Will there be anything left for your estate?   You still own the home and the reverse mortgage will probably never exceed 60% of its value.   If you take a lump sum, the remaining equity is still yours. If you are taking a draw, your home will probably appreciate again once we clear the current slowdown.  The important thing to remember is that you can never owe more than the value of the home. Even if your proceeds were to exceed the value of the home, your heirs will not be responsible nor will other assets be attached.