House Raises FHA Mortgage Insurance Premiums

Posted on June 11, 2010 by admin 
Filed under FHA Articles, FHA FAQ, FHA Guidelines, FHA Mortgage Articles, FHA Mortgagee Letters, FHA news · Tagged:

Yesterday, the U.S. House of Representatives approved a bill to inject finances into the FHA by approving the authority to raise FHA mortgage insuance premiums.  The FHA reserves are low and it created significant cash flow problems that the government was forced to deal with.  It is no secret that Federal Housing Administration is strapped for cash because all of the recent FHA defaults that continue to mount.  The government also considered a measure to raise the FHA mortgage limits used to develop some apartment buildings.  In a 406-4 vote, lawmakers approved legislation to strengthen the finances that back the FHA home loans by giving it authority to nearly triple the annual fees it charges to borrowers, known as mortgage insurance premiums.  Read the original article > House Approves FHA Bill to Reestablish Finances

FHA Delays Implementation of HVCC Standards

Posted on December 22, 2009 by admin 
Filed under FHA FAQ, FHA Mortgagee Letters, FHA news · Tagged:

Enactment of ML 2009-28, Appraiser Independence, will be delayed until February 15, 2010. ML09-28 This bill was originally planned for a January 1, 2010 implementation and has two parts:  a) prohibition of mortgage brokers and commission-based lender staff from the appraisal process, and b) appraiser selection in FHA Connection.  The effective date for both sections of this guidance will now take effect for all case numbers assigned on or after February 15, 2010.  This extension will provide FHA mortgage lenders additional time to adjust systems to accommodate the changes.  FHA mortgage loans have become very popular in the last few years.

Detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter. However, lenders should be aware that the requirement for inputting the appraiser ID and the appraisal assignment date in the FHA Connection case number assignment screen will be removed.  Instead, home loan lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Update Screen once the completed appraisal is received by the lender and prior to closing the FHA loan.

New FHA Condo Guidelines Could Limit Mortgage Refinancing

Posted on September 9, 2009 by admin 
Filed under FHA FAQ, FHA Mortgagee Letters, FHA news · Tagged:

In a June letter to FHA lenders from HUD, the FHA mortgage guideline revisions for condominiums and town homes were announced and documented. Unfortunately for condo owners, the guidelines have tightened for FHA lending and qualifying for mortgage refinancing may become more difficult than in previous years.

Project approval is no longer required for FHA.  FHA streamline refinance loans for HUD Real Estate Owned (REO) sales. If you presently have a FHA mortgage and want a streamline refinance then you are blessed with an easier path for lowering your mortgage rate.  Currently having a FHA loan is a HUD requirement for FHA streamline refinancing.

Ineligible properties include condominium (“condotels”), timeshares or segmented ownership projects, houseboat projects, multi-dwelling unit condominiums [i.e. more than one dwelling per condominium unit], and all projects not deemed to be used primarily as residential.

Here are some additional standards for condo properties, as explained by HUD:

o    At least 50% of the units of a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50% of the number of presold units (the minimum presales requirement of 50% still applies).

o    No more than 15% of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.

o    Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.

o    Projects consisting of four or more units will have no more than 30% of the total units encumbered with FHA insurance.

FHA Loan Modification Guidelines

Check out the latest FHA mortgage guidelines and FHA requirements for their new loan modification efforts for conventional home loans. FHASecure was the first FHA home loan program created to provide mortgage relief for delinquent homeowner who were not able to qualify for a conforming mortgage refinance loan. 

o    FHA announced their new mortgage modification plans to aid distressed FHA borrowers.

o    The FHA home loan is refinanced and 30% of the FHA loan is placed into an interest-free second mortgage that must be paid back when the property is sold or refinanced.

o    Homeowners must qualify with ratios of 31/55. The 1st ratio says that up to 31% of the individual’s monthly income can be used for housing costs and that 55% can be used for housing costs plus other monthly debts.

o    The borrowers must be able to document a hardship (ie. an income change, loss of employment etc.) and HUD must be considered as a long term hardship.   

Read the original article online > FHA Loan Modification Program.

FHA Promotes Homeownership with 8 Thousand in Tax Incentives for Homebuyers

In a recent article, Tara-Nicholle Nelson writes about the significance of FHA mortgage loans and tax credits for first time home-buyers. A few weeks ago, it came out that the number of existing home sales had skyrocketed over the first quarter in the areas hardest hit by the foreclosure crisis: they were up 117% in Nevada, 81% in California, 50% in Arizona and 25% in Florida, year-over-year, and Virginia and Minnesota also had double digit increases. FHA mortgage lenders have been frothing at the mouth all year, because with low FHA mortgage rates driven by Fed cuts and tax incentives, FHA lending is stronger than ever. From January to February, prices rose a tiny, but encouraging, .7 %, according to the Federal Housing Finance Agency’s monthly index.

Just last week, the Secretary of HUD announced new federal guidelines for FHA home loans which allow First-Time Homebuyers (FTH) to monetize their $8,000 Obama Tax Credit upfront, for use toward their down payment or closing costs, rather than only after close of escrow. How will this work? No one really knows yet – federal lending guideline changes usually take a month or so to manifest into concrete checklists and phone numbers you can call to take advantage of them. But it looks like state Housing Finance Agencies and HUD-approved nonprofit organizations will be involved, and will provide the upfront funds to borrowers (for a small fee, of course), which they’ll be reimbursed at tax time next year.

However, the author of the article, noted that she has not heard anyone actually suggest that the upfront monetization of the FHA tax credit won’t be effective at stimulating home sales. On the flip-side, the National Association of Home Buyers’ projections show that about 160,000 homes will be sold as a direct result of this new incentive. But there are folks who don’t like it, and their arguments tend to focus on the worry that no-skin-in-the-game borrowers are the sort of problem homeowner who created the market madness by just walking away when their homes devalued. The pestimistic crowd says that that we might be returning to the bad old days of 100 % financing.

FHA loan overview:
This is a new era of mortgage lending than the stated income days of old (old =2005). It wasn’t no-skin-in-the-game borrowers who walked away and created the foreclosure crisis, it was no-skin-in-the-game borrowers who couldn’t afford their escalating mortgage payments who were the problem children of the real estate market. The upfront monetization of the $8,000 tax credit will only be available for FHA loans, which require full documentation of income, impose strict and low debt-to-income ratios and are characterized by low, 30-year fixed interest rates and payments. This is not a return to the subprime era, when you only needed to be human and alive to get a loan (notwithstanding those few times we saw the deceased and the canine get mortgages).

On careful reading of the few details we do have on this program, it’s clear that it does not, in fact, reduce the amount of down payment funds that need to be deposited by the buyer to get an FHA loan. The $8,000 credit cannot, under current law, be used to meet the minimum 3.5% down payment requirement (although gifts from relatives can). The upfront $8,000 is available for home-buyers to use as extra down payment money (to buy more or lower monthly payments), to pay discount points (reducing their interest rates) or to defray closing costs.  That’s it.

This FHA loan program changes the time frame in which First-Time Homebuyers who close escrow by December 1, 2009 will be able to benefit from their tax credit. Frankly, I’d imagine this will mean lots more folks will put the funds into their homes and into making their loans more affordable.

FHA Insures $144 Billion in Home Loans so Far in 2009

Posted on May 18, 2009 by admin 
Filed under FHA FAQ, FHA news, Mortgage News · Tagged: , ,

The FHA mortgage lending reported endorsing $143.9 billion in single-family FHA home loans in the first six months of fiscal year 2009, up 169% from the same period in FY 2008. The Department of Housing and Urban Development expects FHA endorsements will total $290 billion when the 2009 fiscal year ends on September 30. In March, FHA insured $25.4 billion in single-family FHA loans, including $15.3 billion in FHA refinancing loans, according to an FHA monthly report. The report shows that FHA has a 7.08% serious default rate as of March 31 with 347,500 loans that are 90 days or more past due. FHA had a 6.91% serious default rate back in September. Meanwhile, FHA has a 63% share of the mortgage insurance market, compared to 23% for private mortgage insurers and 13% for Department of Veterans Affairs’ loan guarantee program.

FHA Financing Helped in American Recovery & Reinvestment Act

The American Recovery and Reinvestment Act provides additional provisions:

FHA Mortgage Loan Limits – FHA home loan amount limits will be raised to $729,750 for homes in high-cost areas. Areas with higher-valued homes will enjoy the many benefits of a FHA mortgage, such as low rates and easier qualification standards. The bill reinstates 2008 FHA loan limits, with a maximum cap of $729,750. The bill also provides the option, if warranted, to increase loan limits for any “sub-area”, area smaller than a county. These limits will expire December 31, 2009.

Home Ownership Tax Credit – A non-refundable tax credit of up to $8,000 will be available for buyers who purchase a home this year–before December 1, 2009–and who have not bought a house in the previous 3 years. This tax credit amount is based on 10-percent of the home’s purchase price, up to $8,000. To qualify, homeowners must keep their home for at least 3 years.

Simplified Mortgage Refinancing – Borrowers with less than a 20% equity stake in a traditional loan guaranteed by Fannie Mae or Freddie Mac (commonly referred to as “conforming” loans) may now refinance to up to 95% of their home’s market value without purchasing private mortgage insurance, which typically can increase monthly payments by hundreds of dollars.

Neighborhood Stabilization – $2 billion in additional funding is also made available to create the Neighborhood Stabilization Program (NSP) to address the problems facing whole neighborhoods that are decimated by foreclosures. Funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. States and localities can also use these funds to establish home financing methods for purchasing and redeveloping foreclosed properties.

Reverse Mortgages – Mortgage loan limits on Home Equity Conversion Mortgage (HECM) – or “reverse mortgage” loans will increase to $625,500 until the end of 2009. Current limits, which mirror conforming loan limits, will be raised to open up reverse mortgage options for many seniors who may want to rely on home equity as a stable source of income.

Low Income Housing – States will receive financing for construction and rehabilitation of low-income housing.

Rural Housing Programs – 100% home financing will be made available for rural housing loan programs.

Energy Efficiency Benefits – Tax credits for energy-efficient upgrades will be extended through 2010.

Foreclosure Protection – $75 billion program will be established to subsidize mortgage loan modifications for participating mortgage lenders to assist many distressed homeowners facing foreclosure.

FHA mortgage rates are still at historically low levels and this is still a great time to refinance,” says Isaacs. “However, there has been much talk that banks and lenders will make it harder for borrowers to qualify for loans for both new and refinanced home loans, especially for borrowers with less than perfect credit scores. I urge people considering a new home loan, mortgage refinancing of an existing loan or a loan modification to move quickly to lock in their best loan rate and options.”

FHA Mortgage Programs Remain Strong in 2009

FHA mortgage lending continues to provide more opportunities for new homebuyers and borrowers in need of mortgage refinancing.  FHA rates remain very attractive for borrowers who do not have much home equity left.  FHA home loans enable borrowers with less than perfect credit qualify for refinance loans. The days of the no money home mortgages that assist homeowners in consolidating high rate debt or cash out second mortgage loans that new homebuyers would have to quickly refinance. 

FHA continues to offer great 1st time homebuyer programs with new home financing requiring only 3.5% down. FHA mortgage brokers and lenders remain optimistic that Hope for Homeowners may help some of their borrowers prevent foreclosure. Home financing guru, Jason Cardiff said, whether it’s FHA or a loan modification, homeowners need to get up and do something to stop foreclosure.”  Cardiff continued, “Mortgage lenders continue to provide loan modifications like we’ve never seen before, so contact a lender to refinance or seek counsel from a law firm that has a good track record of mortgage loan modifications with your lending company.”  Read the original FHA loan article > FHA Mortgage Rates Creep Up to 5%

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