FHA Lending Costs Rise for FHA Mortgage Loans

Posted on April 21, 2009 by admin 
Filed under FHA news, Mortgage News, Published Articles · Tagged: , ,

FHA home loan limits were raised materially in 2008, and again in 2009. In early 2009, FHA mortgage market share of new purchases was back to about 15% and its share of mortgage refinancing was substantially higher.   

Compare FHA mortgage rates and FHA lending costs: Borrowers have never been in a better position to qualify for lower mortgage rates.  We suggest analyzing 3 loan offers from different lenders or brokers.  Compare interest rates, loan amounts, origination fees, discount fees, processing fees, underwriting fees and the appraisal fees. Don’t forget that with FHA refinance loans all cash out transactions above 85% Loan to Value now require 2 appraisals from FHA licensed appraisers.  Don’t forget to factor in the upfront mortgage insurance premium, with FHA mortgage loans.  See the complete article at FHA Home Loan Costs.

FHA Mortgage Loans Update with New HUD Rules for Lenders

Check Mortgagee Letter 2009-12, a note from HUD explaining how FHA mortgage loans are to be originated and administered.  In most cases these FHA letters have little content, but this one is a gem. Clearly HUD is concerned about FHA loan defaults, foreclosures and bad mortgages on the public books.

HUD believes that many FHA mortgage lenders have not lived up to the ethic codes and high standards required with FHA underwriting guidelines. That has become a problem because FHA loans that do not meet FHA mortgage lending standards to the letter are likely to be the very loans which cause FHA losses.   In an effort to eliminate this growing concern, HUD says that it “continues to introduce proactive measures to appropriately manage its risk. Recently, FHA reactivated its Special Work Assessment Teams to conduct single-focus on-site reviews of lenders whose originations are exhibiting signs of distress.”

Many insiders, like FHA Mortgage Guide, believe that HUD will be auditing FHA mortgage lenders to make sure these finance companies are originating FHA loans effectively with HUD’s government standards. HUD also said that it “must hold mortgagees accountable for their lending practices in order to protect the public trust and the FHA Insurance Fund.

The Department expects each mortgagee to exercise the same level of care in originating, underwriting and servicing an FHA-insured mortgage as it would for a loan in which the mortgagee would be entirely dependent on the property as security to protect its investment.   When a mortgagee fails to comply with HUD’s policies and procedures, HUD will take the appropriate action. For example, lenders that materially violate FHA loan program statutes, regulations and handbook requirements may be referred to the Mortgagee Review Board for appropriate sanctions, which may include termination of mortgagee approval.”  

HUD has made it clear that compliance with their FHA loan programs is essential or they will remove you from their mortgage lending system. How would you define reasonable and allowable lending fees for FHA home loans? Previously HUD had allowed anywhere from 1-2 points per transaction. The way the mortgage crisis has played out, it has become imperative for most mortgage brokers and lending companies to be able to offer FHA mortgages for new home buying and refinance transactions.  FHA mortgage rates remains at or below 5% for thirty year fixed rate mortgages, so being FHA-approved is at the top of most marketing lists for mortgage companies because the product remains the cornerstone of lending in 2009 and beyond.

HUD’ Checklist for Originating FHA Mortgage Loans-The lenders must at a minimum meet the following criteria listed below:

ü  Reviews all FHA loans with early payment defaults to try and stave off foreclosure.

ü  Has a comprehensive quality control plan.

ü  Does not engage in fraudulent or false or misrepresentative advertising.

ü  Full documentation demonstrating the stability each borrower employment income

ü  No “excessive charges and unallowable fees to the borrower”.

FHA Mortgage Rates Low and Jumbo Rates High

Posted on April 7, 2009 by admin 
Filed under FHA Videos, FHA news, Mortgage News · Tagged: , , ,

New homebuyers benefit greatly because these FHA mortgage loans maintain low rates and HUD’s flexible credit guidelines ensure that fico scores are not the driving factor for approval like how conventional underwriting guidelines use for approving refinance or purchase loans.  FHA mortgages are more aggressive with less equity needed for home refinancing and less needed for depositing with traditional home financing.

 

CBS News’s Kelly Wallace reports that FHA rates and conforming interest rates have dropped significantly, but jumbo mortgage rates remain high, because lenders don’t want to offer low rate incentives for these high risk mortgages that many borrowers in high cost areas find themselves stuck in.