Identity theft occurs when personal information, such as your Social Security number or credit card numbers, are used without your permission to make purchases, obtain a credit card or other account in your name.

Identity theft costs the average victim nearly $4,000 and, more importantly, 175 hours of personal time to straighten out their problems and their credit. This does not include any potential increases in interest rates from creditors and insurance companies, where the financial impact can be even more dramatic, especially if the theft is left undetected. According to the FTC, it takes an average of 12-24 months for most consumers to even notice that a problem exists. And by then, it’s too late. How can you protect yourself from the dangers of identity theft? Stay tuned and I will post some ideas of what you can do to protect yourself.

There are two important dates to keep in mind:

1. This initiative applies to FHA borrowers who secured a loan on or before May 31, 2009
2. This initiative is effective for loans that will be originated on or after June 11, 2012

This is an incredible opportunity that can provide significant savings.

Here’s a quick summary of these changes:

For self-employed borrowers: P&L statements are now required if the last business tax return is more than 3 months old; in addition, statements must be audited if P&L income is greater than the two year average, and the higher income is needed for qualification purposes. If the two year average income is sufficient for qualification purposes, the P&L is still required, but does not need to be an audited one.

For loans with disputed accounts that receive an “Accept” by TOTAL: These are not required to be referred to a DE underwriter for review as long as the total amount of combined balances (1) does not exceed $1,000 and (2) the dates of last activity are older than 2 years. If singular or combined balances total more than $1,000 they must be paid in full at or prior to closing, or provide proof of payment arrangements with 3 months of payments verified.

For collection accounts: If the total balances of all collection accounts are less than $1,000, the borrower is not required to pay them off as a condition of approval. If singular or combined balances total more than $1,000 they must be paid in full at or prior to closing, or provide proof of payment arrangements with 3 months of payments verified. Judgments must be paid unless payment arrangements have been made and 3 months of payments are verified.

For definitions: The following are now included in the definition of family member for the purposes of Identity of Interest transactions: Brother, Stepbrother, Sister, Stepsister, Uncle, and Aunt.

It’s important to understand that mortgage insurance premiums for new purchases and regular refinances are increasing to help keep FHA financially strong. FHA’s cash reserves hit a record low of $2.6 billion last year – and since approximately one-third of all residential home loans in the U.S. are FHA loans, it is important for FHA to be in a strong position.

So what does this mean to you? FHA case numbers assigned after April 9, 2012 will be subject to the higher mortgage insurance premiums.

On October 24, 2011, President Obama announced plans to open up refinancing to more homeowners who are underwater. This proposal was a revision to the previous Home Affordable Refinance Program (HARP) and is now known as HARP 2.0.

Some of the major changes under HARP 2.0 include:

No underwater limits: Previously, borrowers whose loan-to-value limits were greater than 125 percent were ineligible to refinance. Now, borrowers can refinance no matter how far their homes have fallen in value.

Appraisals may be eliminated and underwriting relaxed for most borrowers: Being able to use this program may save time and money, and remove some of the anxiety from the refinancing process.

Deadline extended: Borrowers now have until December 31, 2013 to get refinanced under HARP 2.0.

These changes will be put into effect by Fannie Mae and Freddie Mac the week of March 19, 2012.

It’s also important to note that the HARP 2.0 Program is for loans that were secured by Fannie Mae and Freddie Mac prior to June 1, 2009. Currently, loans obtained after this date are not eligible for this program. You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

http://www.freddiemac.com/mymortgage
http://www.fanniemae.com/loanlookup/

Emancipation Day falls on Monday, April 16 and since the tax code says that filing deadlines can’t fall on Saturdays, Sundays, or holidays, that means your tax filing isn’t due until Tuesday, April 17, 2012.

Albert Einstein once noted that, “The hardest thing in the world to understand is income tax.” And with all the changes that happen in the tax code each year, it’s easy to see why he said so! If you have any questions about your taxes, your best bet is to talk to a CPA or tax professional.

The FHA loan is one of the best options for homebuyers in today’s market. Buyer agents need to know the FHA loan limits so they can properly advise their buyers, and listing agents need to know the FHA loan limits to know whether to accept FHA financing terms on their listings.

6. About half of home sellers traded up to a larger and more expensive home… and 60% traded up to a new home.

7. The top 3 factors influencing neighborhood choice were: the quality of the neighborhood, the convenience to job, and the overall affordability of homes.

8. The typical seller lived in their home for 9 years. That number has increased from 6 years in 2007.

9. Although 61% of sellers said they reduced their asking price at least once, the average home sold for 95% of the listing price.

10. Only 10% of sellers sold their homes without the assistance of a real estate agent. Of these people, 40% knew the buyer prior to the sale.

11. The typical “for sale by owner” home sold for $150,000 compared to $215,000 for the average agent-assisted home sale.

1. In 2011, 37% of homebuyers were first-time buyers – which was down from 50% in 2010.

2. Last year, 88% of homebuyers used the Internet to search for a home. That number was down slightly from a high of 90% in 2009.

3. The typical homebuyer searched for 12 weeks and viewed 12 homes.

4. The number of buyers who purchased their home through a real estate agent or broker climbed to 89% – a share that has steadily increased from 69% in 2001.

5. Nearly 1 out of 4 buyers said the application and approval process was “somewhat more difficult” than expected… and 16% reported it was “much more difficult” than expected.

Check back tomorrow for Trends 6 – 11….

Here’s what’s happening and what it means to home loan rates:

What is happening and why? To put it bluntly, the passage of the payroll tax cut extension is being funded via a guarantee fees or “g-fee’s” by at least 10 basis points on the rate. So rather than giving a par rate of 4.00%, for example, the par rate is now increased by at least 10 basis points, or approximatley 4.10%. But as you probably know…home loan rates are priced and offered in .125% increments, so this will most likely impact the consumer by .125% in rate. Whether you agree or not on the politics behind this cost being passed along to folks who are taking out mortgages, the Congreeional Budget Office recently estimated that the increase will ultimatley pay for about $35.7 Billion of the cost of the payroll tax extension.

What exactly is this “g-fee”? The guarantee fee or “g-fee” is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit related losses in the overall mortgage portfolio, in other words, it acts a lot like insurance and helps lower the overall risk…which means home loans can be offered at terrific interest rates to borrowers that have good – but not perfect – credit.

What exactly is the impact of the rate increase? For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front – but most folks will not do this.

Who will this impact? The change will impact all new borrowers of Fannie Mae and Freddie Mac loans. The bill will also impact Federal Housing Administration (FHA) loans by increasing the annual mortgage insurance premium that borrowers pay by one-tenth of a percent.

When will it start?Officially, the increase to guarantee fees will begin on April 1, 2012. However, the increase is already starting to be seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until April…and therefore will need the increased g-fee priced in earlier.

How long will it be in effect? The increase will be effective through October 1, 2021.

The bottom line is that the g-fees will be going up…and this will impact home-buyers looking to obtain a home loan through Fannie Mae and Freddie Mac and FHA.