Mortgage Matters - SunTrust Mortgage

FHA to use FICO scores for risk-based pricing on loan insurance
The FHA plans to shift to a 'risk-based' system tied to credit data to price its mortgage insurance.
By Kenneth R. HarneyWashington Post Writers GroupMay 18, 2008DALLAS -- Who has a better credit score on average -- a home buyer with higher or lower income?Inside the country's fastest-growing mortgage program, the surprise answer is: People with lower incomes have slightly higher FICO scores. That finding, which emerged from a statistical analysis of all approved mortgages insured by the Federal Housing Administration during fiscal 2007, is now buttressing a policy switch that could affect thousands of buyers and refinancers.The FHA, which for decades has used a one-size-fits-all approach to pricing its insurance on home loans, plans to shift to a "risk-based" system keyed to FICO scores and down payments, beginning as early as mid-July. Private-sector lenders and insurers have priced interest rates and premiums using sliding scales of FICO scores and down-payment amounts since the mid-1990s.The agency's move, which will cover new applications including "jumbo" loans up to $729,750 in high-cost markets through December, will bring the FHA in line with the private sector's main approach.Brian D. Montgomery, the FHA's top official, outlined the impending change in a speech here May 8 at the annual conference of the National Assn. of Real Estate Editors. Under the old approach, he noted, buyers with stellar FICO scores paid the same premiums as borrowers with poor scores. That amounted to a pricing inequity for applicants who presented a low risk of default on loans and an inappropriate subsidy of applicants who were likely to default.A study of an entire year's applications turned up the additional fact that the FHA's lower-income borrowers typically had higher FICO scores than those with larger incomes."Is it counterintuitive? Yes," Montgomery said. According to the study, applicants with FICO scores of 680 to 850 had a median income of $48,756 last year, while those with low scores of 500 to 559 had a median income of $53,388. Fair Isaac Corp.'s FICO scores range from about 300 to 850 -- the higher, the better -- and are predictive of future defaults and foreclosures. Even at rock-bottom down payments of 3%, applicants with lower incomes had higher credit scores than applicants with bigger incomes making similar-size down payments.All of which underlines the key reason for making the switch to risk-based pricing: Why should people who have demonstrated superior credit -- irrespective of their income levels -- pay the same mortgage insurance premiums as loan applicants who have seriously flawed credit histories?Under the new system, according to the FHA's outline of its plan, "a larger number of low-income borrowers [will] benefit from premium reductions than . . . moderate-, middle- and upper-income borrowers combined."On 30-year mortgages with down payments of 10% or more, applicants with FICO scores above 680 will qualify for the lowest premiums -- 1.25% of the loan amount upfront and annual renewal premium payments of 0.5%. Borrowers with down payments of less than 5% and poor credit scores -- FICOs ranging from 500 to 559 -- will be charged premiums of 2.25% up front and 0.55% annually. All borrowers will continue to receive the same market-based interest rate. Under the current system, borrowers pay uniform 1.5% premiums upfront and 0.5% annually.To set premium rates by credit standing, the FHA plans to use the middle score of an applicant's three FICOs generated by the national credit bureaus -- Equifax, Experian and TransUnion. If only two are available, it will use the lower. For applicants with thin or "nontraditional" credit histories on file at the bureaus, the FHA will underwrite and price the loans without reference to FICOs, with heavier emphasis on rent and utility payments among other measures of creditworthiness.Although FHA mortgage volume has more than doubled in the last year, the move to risk-based pricing is expected to make it more attractive to buyers and refinancers.During the housing boom years, the FHA lost much of its business to subprime lenders and insurers who offered zero-down, low- or no-documentation loans at high interest rates and fees, including prepayment penalties.The FHA, by contrast, always has required at least a 3% down payment and full documentation of income and assets but has never permitted prepayment penalties.Since taking over as FHA commissioner in 2005, Montgomery has emphasized "modernizing" the agency and winning back market share. That has included pushing for higher loan limits to serve greater numbers of borrowers in high-cost areas such as California and the East Coast.The FHA also is now the government's key vehicle for refinancing borrowers stuck with unaffordable -- and often toxic -- subprime mortgages.

Omega 3 Refresher

As you may already know if you're following the South Beach Diet, Dr. Agatston frequently stresses the importance of getting enough omega-3 fatty acids in your diet. That's because omega-3s offer important health benefits.
Omega-3s are essential fatty acids that must be obtained through diet or supplements. The human body does not possess the ability to make them. There are three types of omega-3s, each essential for optimal health. Two kinds, eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA), are found mainly in cold-water fish such as tuna and salmon. EPA and DHA are extremely effective at reducing inflammation and preventing the formation of blood clots, thus reducing the risk of stroke and heart disease. The third kind, alpha-linolenic acid (ALA), is found in plant sources such as flaxseed, canola oil, and dark, leafy greens. ALA has been shown to lower the "bad" LDL cholesterol, and an ALA-rich diet may lower the risk of a heart attack.
The best and most natural way to increase your intake of omega-3s is to eat more fish (at least two servings per week) and leafy greens, and to add ground flaxseed and canola oil to your diet. Dr. Agatston also believes that, in addition to the above, all adults should take a fish-oil supplement daily. He recommends one to two grams of EPA plus DHA per day. People with high triglycerides may need more — at least four grams daily.
Be advised that people with certain medical conditions, such as those taking anticoagulants, those with bleeding disorders, or those with uncontrolled hypertension, should consult with their physician before taking fish-oil supplements. Also note that certain fish, including swordfish, king mackerel, and tilefish, contain high levels of mercury. Women who are pregnant or may become pregnant, nursing mothers, and children should avoid fish high in mercury.

IndyBank Update

Consumer prices edged up only 0.2% in April, slightly lower than the 0.3% rise that economists anticipated, the Labor Department reported May 14. Core inflation, which excludes food and energy prices, increased just 0.1%, also lower than analysts’ 0.2% forecast. Helping keep a lid on inflation was the price of hotel rooms, which fell by 1.9% in April, the third straight monthly decline reflecting cutbacks in business and vacation travel.
Housing posted a surprising rebound in April as the pace of new-home construction rose 8.2%, the biggest monthly increase in more than two years, the Commerce Department said May 16. Most growth came from a 36% jump in apartment construction.
The housing market was further buoyed by Fannie Mae’s announcement on May 16 that it was eliminating higher minimum down payment requirements for borrowers in distressed real estate markets. The government-sponsored enterprise said it will require minimum down payments of between 3% and 5% for all loans it guarantees. The change replaces a December policy that required a higher minimum if the loan was for a home in a declining real estate market.
Fannie’s reversal is much needed because the number of U.S. homes facing foreclosure in April shot up 65% versus the same month a year ago, and 4% since March, RealtyTrac said May 14. One in every 519 U.S. households received a foreclosure notice in April.
The slowing economy contributed to the lowest level of consumer confidence in 28 years, according to the Reuters/University of Michigan consumer sentiment index, which has been tracking consumer confidence in the economy for more than half a century. The preliminary index fell to 59.5 in May from 62.6 in April. A reading above 100 indicates strong consumer confidence.
Economic news due out this week includes the Conference Board’s Leading Economic Indicators report on May 19 and the existing home sales update on May 23.
Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.

What Many Of Us Already Knew!

Apparently, there's just something about North Carolina. For the second year in a row, America's best city in which to live lies within its borders, according to Relocate-America.com's annual list.
This year, Charlotte, N.C., is in the top spot, the site announced this week. Last year's winner was Asheville, N.C., which slipped to No. 7 on this year's list.
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"North Carolina is very active on our radar," said Steve Nickerson, president and CEO of HomeRoute. "It continues to get a flood of interest from all over."
HomeRoute is the real estate firm that operates Relocate-America.com, a source of community information and real-estate resources for those who are relocating. Each year, the site ranks the top 100 places to live in the country.
Areas need to be nominated on the site in order to be eligible for the list; more than 2,000 were nominated this year, Nickerson said. Special efforts are made to prevent spamming campaigns from influencing the results, he added.
But the site's editorial team also takes into account an area's growth, its educational and employment opportunities, crime rates and housing options before granting it a spot in the top 100. Environmental highlights also play a role, with a city gaining points for good air and water quality or the strength of its recycling efforts, Nickerson said.
Home-price appreciation does get some consideration, however it's only one piece of the analysis, Nickerson said -- explaining why some struggling real estate markets in California and Florida, for example, still made the top 100. Areas that offer a comfortable climate and economic opportunity tend to be the most sought-after communities on the site, he said.
More from Yahoo! Finance: • 10 Fastest Growing Real Estate Markets• 12 Ways to Make Your House a Cash Cow• 5 Cities With Biggest Decline in Home Values
Charlotte's diversity of housing options and home affordability were two of the reasons users nominated the city, Nickerson said. The city's strong economy, boosted largely by the banking industry, was another selling point.
Second on this year's list was San Antonio, Texas, which people praised for its cost of living, recreational opportunities and diversity, he said. Chattanooga, Tenn., came in third place, noted for its vibrant downtown and affordable home prices in the nominations.
Below are the top 10 cities in Relocate-America.com's 2008 list:
1. Charlotte, N.C.
2. San Antonio, Texas
3. Chattanooga, Tenn.
4. Greenville, S.C.
5. Tulsa, Okla.
6. Stevens Point, Wis.
7. Asheville, N.C.
8. Albuquerque, N.M.
9. Huntsville, Ala.
10. Seattle, Wash.

Zillow - First Quater Charlotte Home Values

According to Zillow's latest Home Value Report, home values in Charlotte increased 2.5% in the first quarter of 2008, compared to the first quarter of 2007. Nationally, single-family home values decreased 7.5% while condo values declined 9.0% during this same period. Use this information to help keep your clients informed.

Park Update

Nature Preserves and Natural Resources:
Ø Electric Vehicle Grant: The Division was successful in being awarded a Clean Fuel Advanced Technology grant (CFAT) by the NC Solar Center/NC State University, the NC State Energy Office, Department of Transportation, and NC DENR. The grant will fund approximate 70% of the purchase price ($34,000) for three alternative fuel electric vehicles. These vehicles operate on nearly 1 cent/mile, produce zero emissions, and will be used by maintenance and natural resources staff at Latta Plantation and McDowell Nature Preserves.

Ø Becoming an Outdoors Woman: For more than a decade, the Becoming an Outdoors-Woman (BOW) program has taught North Carolina women the information and skills they need to enjoy a wide range of outdoor recreational activities. McDowell Nature Preserve outdoor recreation staff, in cooperation with the North Carolina Wildlife Resources Commission, will host Beyond BOW this weekend, an extension of a recent workshop. Participants will enhance their skills in camping, kayaking, outdoor cooking and much more. BOW participants say they feel more positive about hunting, fishing and other outdoor activities as a result of these programs and that they are more likely to participate in those activities in the future.

Ø Battle of Cowan’s Ford Re-enactment: Join the excitement and drama of the Revolutionary War reenactment of the Battle of Cowan’s Ford at Rural Hill this weekend, Saturday at 2 p.m. Smell the fires, hear the muskets and cannons, and listen to the soldiers and militia plot strategy for the battles of 1781. Gate opens at 10 a.m. Concessions and colonial crafts will be available for purchase.

Ø New CMS Partnership: Environmental Education and Outdoor Recreation are partnering with CMS Derita Alternative School to provide a combination of continuing education for teachers and environmental education, team building, and outdoor recreation programming for students. Programs for teachers will begin this summer.

Park Operations and Athletic Services:
Ø Sailing Center Proposal: Staff presented the sailing center proposal to the Lake Norman Marine Commission in April. At that meeting, they deferred any comments until May. Last Monday, the Commission indicated they would review the proposal through the normal dock application process through Duke. Staff has been in contact with Duke to determine the appropriate application process.

Ø USSSA Youth Baseball Tournament: Nevin Park will host a 2-day event from 9 a.m. – 8 p.m. May 17-18 at the softball/baseball complex located at 6000 Statesville Road.

Greenway Planning and Development:
Ø Irwin Creek Greenway, West Blvd. to Barringer Dr.: Staff from Park and Recreation, RES, and CDOT met to discuss the opportunities and constraints of underpasses beneath Barringer Drive and Remount Road. The design consultant, Gary Wirth of Wirth & Associates, was also present. CDOT was optimistic that the underpasses could be permitted and therefore design of them will move forward. A mid-block crossing at Barringer Dr. will also be pursued as an alternative to the underpass.

Ø Little Sugar Creek Greenway
o Tyvola Road WWTP Coordination:
Staff from Park and Recreation and CMUD met this week at the Tyvola Road Wastewater Treatment Plant to discuss the schematic design of the greenway. Park and Recreation will continue to work closely with CMUD as they move forward with their master plan, and as they refine their construction schedule for phase 1 of the plant expansion. This section of Little Sugar is targeted in the 5 year greenway development plan. The final stakeholder meeting is scheduled for Wednesday, May 21, 2008 where greenway alignment and schedules will be discussed.

o Charlottetowne Avenue to Morehead Street:Things are moving between the Charlottetowne Avenue and Morehead Street. United Construction is working hard to improve the outfall of the tributary from Pearl Street Park...it will be in plain view from our Metro Park, a formal event garden along the greenway. This stone-clad waterfall is taking shape and should be up and running soon. You'll also see the shoring panels for the central fountain feature across Kings Drive from Interstate Tire and Battery. We hit rock, so our structural engineer is double-checking the structural design of the fountain to see if we need more lateral support.

Ø McDowell Creek Greenway, Cornelius: The Town of Cornelius received right-of-way certification for the grant portion of the project, and the County requested construction authorization from NCDOT. It is anticipated that construction authorization will be granted over the next week or two. Staff met with the consultants to discuss the bidding and construction schedule. The tentative dates are as follows: 1) Advertise for bids: May 29, 2008; 2) Bid Opening: June 26, 2008; 3) BOCC Award of Contract: August 5, 2008; 4) Construction Notice to Proceed: September 4, 2008.

Ø Toby Creek Greenway, UNCC Area: A presentation was made to Autumnwood Homeowners Association about the Master plan process and plans for Toby Creek Greenway. Within 10 years the greenway may connect their neighborhood to Mallard Creek Greenway through UNCC and these citizens are very excited.

Ø Torrence Creek Greenway, Huntersville: Staff from Park and Recreation, LUESA, and RES met this week to discuss coordination between the Torrence Creek Greenway and Stream Restoration project. The Stream Restoration Project is in the beginning stages of design. Although the greenway project is almost finished with design, there have been and will continue to be some delays in the greenway project. Therefore, it is possible that these projects will be close to the same timeline when construction begins. Park and Recreation has asked LUESA to add two bridges to their scope so that it can be modeled as part of the stream restoration project making it easier to get a flood land development permit. Staff from these departments will begin to have quarterly coordination meetings on these two projects.

Community and Recreation Center Services:
Ø Apprenticeships through Citizen Schools: The Park and Recreation 10 week Apprenticeships were completed through Citizen Schools, May 7 through May 9 at Albemarle Road, Eastway and MLK Middle Schools. During each WOW event, staff members, Jana McMullen, Laura Domingo, Tondra White, Derrick Montgomery, Alvis James and Cynthia Smith-Perkins were recognized for their efforts and hard work during the last three months. Each staff member made an impact on the lives of the participants by providing them knowledge, skill development and hands on experiences. The children in each apprenticeship made a presentation about what they learned and shared the information with family and friends. Additionally, “The Event of a Lifetime" WOW was held at Sugaw Creek Recreation Center on May 5 with the assistance of Recreation Specialists from all recreation center corridors. Our Recreation Specialists assisted the children while the children ran the event for their peers and Citizen Schools Staff. The May 5 event was the first time that all three campuses participated in an event together. Look for future apprenticeships with Citizen Schools in September.
Senior Games Performing Arts Showcase: Levine Senior Center in Matthews hosted the 2008 Senior Games Performing Arts Showcase on Wednesday, May 14. Sixty seniors between the ages of 55 and 98 danced and played the drums and bells to the enjoyment of the Ø crowd. The Pineville Ms. Steps tap dancing group won the best of show and will represent Mecklenburg County at the State Games in Raleigh. The Silver Stars cheerleading squad will represent the county in the small group cheerleading showcase.

Ø 521 Recreation Center Sponsorship: 521 Recreation Center staff met with local business owners from Cold Stone Creamery, Century 21 and Bowden Reality to discuss plans for a Sponsorship Kick-off Celebration at the center. The event is scheduled for August 25 to coincide with back to school and the opening of the new Elon Park Elementary School. The event will have all the 521 Recreation Center vendors and partners on display, as well as fun for the entire family.

Ø Spring Fund Day: The Merry Oaks Recreation Center and Merry Oaks Elementary School will partner to do its annual Spring Fun Day on Friday, May 16. A total of 300 plus children and families are expected to attend. The event will include clowns, inflatable, cotton candy, a dunking booth and much more. The purpose of this program is to reward the children for a great school year.

Ø Home School Triathlon: Swim, Wheel, Run: Tuckaseegee Recreation Center will be having its 1st annual Home school Triathlon at Marion Diehl recreation Center named the "Mini Tri Challenge". This event takes the traditional triathlon and breaks it into a smaller more manageable event for those kids who have never participated in a triathlon program. Kids will be able to use anything with wheels that is self propelled. This is the first of its kind which targets only the Home school population. The kids trained all year in the Try-A-Tri program led by James Brown. The event is scheduled for Saturday May 17 at 8 a.m.

Ø 4-H Horse Show: Mecklenburg County will host the Southwest District 4-H Horse Show to be held at Latta Equestrian Center Saturday, May 16 and Sunday, May 17. The purpose of the show is to allow 4-H youth from across the 14 county districts to qualify to show in the State 4-H Horse show in July. With over 160 horses and individual 4-H’ers registered, this year marks the largest show the district has ever held. The show will begin at 8:30 a.m. on Saturday with the hunter and western showmanship classes. The rest of the day will include the hunter jumping classes and western equitation, trail and games classes. The show continues Sunday at 10 a.m. with hunter flat classes, dressage and western pleasure classes. The show is free to public spectators. For more information on 4-H and the horse program visit http://www.mecklenburgcounty4h.org/ .

Ø 10th Anniversary of “May Day Play Day,” Friday, May 9 at Reedy Creek Park: Every spring since 1998, this special day at Reedy Creek has been filled with organized games and socialization for students who are deaf or hard of hearing, toddlers through high school age, from Mecklenburg County and surrounding areas. Almost 100 children attended May Day Play Day this year, kicking off Better Speech and Hearing Month and offering children, parents and teachers an opportunity to play together, exchange information and share experiences with each other. May Day Play Day is co-sponsored annually by the Therapeutic Recreation Division of the Mecklenburg County Park & Recreation Department, BEGINNINGS, Inc. for Parents of Children Who Are Deaf or Hard of Hearing, and the Charlotte Regional Center (CRC) of the NC Division of Services for the Deaf and Hard of Hearing. It is always rewarding to see children using hearing aids, sign language, FM systems, and cochlear implants to mingle and play with each other. The weather was spectacular on May 9, and the children enjoyed all the activities, including a visit from the Carolina Clowns and our own RAY. The day wouldn’t have been complete without face painting and snow-cones.

Ø Young Adult Travel Group ventures to Wilmington, NC: The Young Adult Travel Group traveled to Wilmington, NC May 12 -14. This trip was filled with excitement and many learning opportunities about the history of the North Carolina Battleship and its prominent success during the war. Everyone participated in a river boat cruise and a trip to Wrightsville Beach. They also participated in a planning and budgeting session prior to attendance to practice their personal finance skills and budgeting. We were able to take 8 young adults along for the ride. The Young Adult Travel Group is a program for young adults ages 18 and older with disabilities. Each member assists with planning location and activities while discussing budget, transportation, and lodging.

Ø Adaptive Baseball League: Therapeutic Recreation’s Adaptive Baseball League completed its 2008 season on Saturday, May 10. The league had four teams made up of 42 youth and teens who have disabilities and/or special needs. The teen team had a scrimmage with a community teen traveling baseball team called the BLAST. They performed drills together and played a game. A great time was had by both teams. The Adaptive Baseball League capped their season off with a "Team Recognition Day" on Sunday, May 11 at the Field Crest Cannon Stadium with the Kannapolis Intimidators, minor league baseball team. The day consisted of a picnic, baseball game, player autographs, scoreboard team recognition, and public service announcement. The organization also provided t-shirts for the players and a display table for MCPRD-TRD program promotion. The players were very excited and had a great time.

Enterprise Services:
Ø GOLF: Play Golf America Day: Play Golf America Day is scheduled for Saturday, May 17 at Charles T. Myers Golf Course in Charlotte. Free to the public, activities will run from 10 a.m. to 4 p.m.

People of all ages who wish to investigate golf for the first time or would like to come back to the game after a time away are especially encouraged to attend. From instruction to equipment to pure entertainment, Play Golf America has something for everyone who might be fascinated by golf.

PGA professionals will be on hand to give free lessons to participants and a free video lesson will be delivered to students by e-mail after the event. Golf equipment manufacturers and retailers will be present to allow participants to hit the newest clubs.

Also on the program is Peter Johncke, trick shot master who will entertain and dazzle with his ability to hit the most improbable of shots. He will perform in two shows at 11 a.m. and 2 p.m.

In addition, there will be a putting competition throughout the day. Each participant will receive a complimentary gift package and each junior in attendance will receive a free golf club. Prize drawings will be held every hour.

Ø Track and Field: Staff will host the 2008 North Carolina State Private High School Championship meet on May 16 - 17 at the Irwin Belk Complex at Johnson C. Smith University. More than three hundred (300) athletes are expected to participate from across the state.

Staff is hosting a morning and afternoon session of Tot Olympics at the Irwin Belk Complex at the Johnson C. Smith University on May 16, 2008. The track and field program focuses on children ages 3-5 years old. One hundred eighty (180) children are expected to participate. Children from local day care and recreation centers are exposed to modified track and field events and health and fitness exercises.

Ø Ray’s Splash Planet: Ray's Splash Planet concluded their Mom and Tot Meet and Greet Program for this season on Monday May 12, 2008 with over 150 moms, dads and toddlers exposed to the indoor water park. Meet and greet socials were also held in the birthday party room. The program was designed to run during the school year from September through May on the second Monday of each month. The goal of the program was to encourage parents to bring their toddlers to the splash park during non-peak hours so the little ones could splash around, go down the waterslides, play in the fountains and have loads of fun! Reception to the program was remarkable. The September 2007 event attracted approximately 30 participants and peaked with over 215 participants in March and April. The program will be offered again starting Monday September 8, 2008.

Stop Scale Obsession

Do you weigh yourself every day? Do you worry about even the slightest change in your weight? If you answered yes to either of these questions, you may be obsessing over the scale — and if you're trying to maintain healthy habits, this behavior can actually be counterproductive.
The truth is, your weight may change from day to day for many reasons. Fluid retention, hormonal fluctuations, constipation, and even the food you eat right before stepping on the scale can cause daily ups and downs. These variations can be misleading and worrisome if you don't understand them. For an accurate measurement of your weight, weigh yourself only once each week and on the same scale every time (different scales may give different readings). An even better method of measuring your success is to let your belt be your guide. If your clothes fit better and you feel better, then you're getting healthier — even if the bathroom scale doesn't show big changes.
Ultimately, it's up to you to stop scale obsession. Weight loss takes time, so patience is required. Dr. Agatston, preventive cardiologist and author of The South Beach Diet says, "It's a marathon, not a sprint." Remember, if you're practicing weight-healthy habits like those recommended by the South Beach Diet, you will enjoy better health, and the extra pounds will come off in the process — whether you step on the scale every day or never again.