FHA Offers Mortgage Relief Solutions

FHA borrowers have refinance options that enable struggling homeowners to avoid going the loan modification route.  There is nothing wrong with getting a loan modification, but you can expect the process can take 6-12 months and you risk you losing your home in the process.  Just last week, the New York the state attorney general, Andrew Cuomo, has sent cease and desist letters to more than 200 loan modification companies.  The FHA loan Pros published an article that discussed how FHA customers could get relief without getting tangled up with mortgage relief companies.  They pointed out that laws for mortgage relief companies vary by state but Cuomo reached out to homeowners with FHA mortgage relief  insured by HUD.

The NY attorney general’s office said “Mortgage relief companies target homeowners facing foreclosure by promising to restructure their home loans with an affordable loan modification. Cuomo accused these mortgage relief companies of operating in deceptive practices that lure distressed homeowners to pay them for mortgage relief services, yet they often fall short to modify the mortgage.

The FHA Mortgage Solution

First of all FHA has been helping struggling homeowners since 1934. With their flexible FHA guidelines, HUD has been a leader in the foreclosure prevention arena. FHA has solidified a good reputation for rectifying FHA loans in default.  In 2009 the FHA annual report says that “82.7% of the FHA mortgage loans that were 90 days or more delinquent were brought under control.”

To get FHA mortgage relief, you need to contact a HUD foreclosure avoidance counselor at http://www.hud.gov/offices/hsg/sfh/hcc/fc/. There is no fee for their mortgage relief services so you have nothing to lose.  FHA refinance guidelines remain more flexible than conventional loan programs.   For borrowers who don’t have much home equity, they may still qualify for a rate and term FHA refinance at 96.5%.

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

Will FHA Mortgage Programs Survive?

Posted on June 9, 2010 by admin 
Filed under FHA Articles, FHA Guidelines, FHA Mortgagee Letters, FHA news, FHA requirements, Mortgage News · Tagged:

FHA has been in the news a lot lately. Yes, FHA mortgage rates are low, but the FHA mortgage program as a whole may be in jeopardy of existence.  Many FHA blogs have posed the reality that FHA financing is at serious risk to be shut down.  In this political climate it becomes obvious that anything is possible because Congress must pass bills to continue to fund the FHA mortgage programs.  FHA first time home buyer loans have been promoting home ownership since the great depression.  Even as we discuss their recent failures, the argument could be made that FHA is one of the most successful government initiative in the last century.  Read the original article > Is FHA Mortgage Financing in Trouble?

FHA Mortgage Guidelines 10% Down for Low FICOs

Posted on January 22, 2010 by admin 
Filed under FHA Credit, FHA Guidelines, FHA Mortgage Articles, FHA Mortgagee Letters, FHA news, FHA requirements · Tagged:

FHA continues to alter their FHA mortgage guidelines in an effort to improve its depleted cash reserves.  A few days ago, the Federal Housing Administration unveiled tighter FHA guidelines with changes to the FHA requirements for underwriting new home loans and refinancing.  For the first time, FHA credit requirements will penalize applicants with challenged credit.  One of the FHA requirements changes will mandate larger down-payments for borrowers with bad credit or low FICO scores. In addition FHA will increase in the upfront mortgage insurance premium to 225 basis points.  We also anticipate FHA, to expand their criteria for mortgage refinance guidelines in 2010.

FHA commissioner David Stevens declined to provide any guidance on how much money the changes will raise for the reserve fund. Most of the new FHA guidelines outlined Wednesday will go into effect in the next few months. The 10% down-payment is required for borrowers with FICOs of less than 580. The MIP will be increased in a few months from the current charge of 1.75 basis points.

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.

HUD Approved to Increase FHA Mortgage Lending Capacity

Posted on December 16, 2009 by admin 
Filed under FHA Mortgagee Letters, FHA news, Mortgage News · Tagged:

House and Senate appropriators are increasing the FHA funding for the Department of Housing and Urban Development.  The government approved the increase of funding to prevent mortgage fraud, update its technology while increasing FHA mortgage lending capacity to $400 billion!  Read more at http://twitter.com/FHAhomeloanco.

HUD Seeks to improve FHA Mortgage Loans

Posted on December 11, 2009 by admin 
Filed under FHA Mortgagee Letters, FHA news, Mortgage News, Published Articles · Tagged:

FHA has not been immune to mortgage loan defaults, late payments and foreclosures.  FHA loan programs have supported a majority of home financing portfolios for purchase and refinancing. The FHA is also in need of additional capital after an actuarial report found the agency’s secondary reserves have fallen below the required 2%, to 0.53%, as losses from borrower defaults rose.  The housing agency insures nearly 30% of all purchase mortgages and 20 % of refinanced loans, according to HUD Secretary Shaun Donovan.

The proposed FHA lending changes or new FHA guidelines include:

*  HUD will increase “up front” cash required on a home purchase loans, giving the buyer more “skin-in-the-game.” FHA said it can tap several options, and analysts say it will mean some increase to the current minimum down payment of 3.5%. About 31% of purchase loans done in the first eight months of 2009 had the maximum 96.5% loan-to-value. Another 55% had 95% to 96.5% LTVs for FHA mortgage options.

*  The FHA will raise the minimum credit score for new borrowers. The FHA has yet to determine the minimum “FICO” and may factor in the down payment.

*  HUD will increase compliance and hold FHA lenders accountable for losses associated with loans that do not meet FHA standards. As of Dec. 8, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.

*  HUD might increase the 1.75% up-front premium and/or annual mortgage premiums. It is asking Congress to raise annual premiums since that would raise capital with the lowest borrower impact, Donovan said.

*  HUD cut allowable seller concessions to 3 % from 6 % in a move to limit incentives to inflate appraised values. The move reduces the money the seller can contribute to a buyer’s closing costs, discount points and other concessions without impacting the buyer’s mortgage.

*  It will boost enforcement and hold FHA lenders accountable for losses associated with loans that do not meet FHA requirements. As of December 8th, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.

FHA Guidelines Tighten Credit

Posted on December 7, 2009 by admin 
Filed under FHA Mortgagee Letters, FHA news · Tagged:

The Obama administration is moving to tighten credit standards on FHA loans by increasing the amount of upfront cash homebuyers must bring to the table, raising minimum credit scores for new borrowers and reducing maximum seller concessions from 6% to 3%.  The most obvious way to increase upfront cash requirements would be to raise the 3.5% minimum down-payment requirement for loans guaranteed by FHA. 

A bill introduced Oct. 1 by Rep. Scott Garrett, R-N.J., would raise the minimum down-payment for FHA loans to 5% and prohibit financing of closing costs. HR 3706, which has 27 co-sponsors, has been referred to the House Financial Services Committee.  Housing Secretary Shaun Donovan, briefing committee members on the administration’s plans Wednesday, said there are several ways to make sure borrowers have more “skin in the game” currently under consideration.  HUD has “made the decision to exercise our authority to increase the upfront cash that a borrower has to bring to the table in an FHA loan,” Donovan said, but there “are several ways to accomplish this, and so we are currently analyzing various options to determine which is the most effective and consistent with our mission.”

Testifying on behalf of the National Association of Realtors, Vicki Cox Golder urged Congress and the administration to “exercise caution before introducing proposals that may have a profound adverse impact on our economic recovery.”  NAR is strongly opposed to HR 3706, she said, because increasing FHA’s down-payment requirements would make it impossible for many borrowers to use the program, and “not add a penny to FHA’s reserves.”  Dan Green, a Cincinnati-based loan officer for Mobium Mortgage Group Inc., said an increase in minimum FICO could have “a much larger impact than increasing down-payment requirements from 3.5 to 5%.  The minimum FICO score for FHA mortgage loans was raised from 500 to 580 earlier this year, he said, although most lenders already have even higher minimums.  “Most consumers are going to walk into their bank, and their bank will say 620″ is the minimum score needed to obtain a mortgage, Green said.

FHA loan programs find themselves in a difficult position, Green said, because Fannie Mae and Freddie Mac continue to tighten their guidelines, and that pushes more borrowers who are less creditworthy into FHA loans.  “They are trying to limit their exposure to the riskiest borrowers,” Green said. “Your median FHA borrower looks decidedly worse today than 18 months ago.  Green noted that Fannie Mae will implement a minimum 620 FICO score and other underwriting changes over the weekend of December 12th as part of its rollout of its Desktop Underwriter Version 8.0 software. 

With claims on its mortgage insurance fund rising, HUD is also considering raising FHA mortgage insurance premiums, Donovan told the committee.  Borrowers currently pay an upfront premium of 1.75%, plus annual premiums of 0% on FHA home loans with loan-to-value ratios of up to 95%. The annual premium on loans with higher LTVs is 0.55%.  Although HUD has the authority to raise the upfront premium to as high as 3% without additional input from lawmakers, annual premiums are at their statutory limits.  Donovan said HUD is requesting authority from lawmakers to raise annual premiums for new borrowers, “as this is one of the most effective means of raising capital” for the FHA’s capital reserve fund, which has dipped below statutory minimums.  Raising the annual premiums of FHA borrowers would likely be a greater hardship than increasing their upfront premiums, since the cost of upfront premiums can be financed into a mortgage, said Faramarz Moeen-Ziai, a mortgage banker at San Ramon, Calif.-based Bank of Commerce Mortgage.

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