HUD Seeks to improve FHA Mortgage Loans
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 As of Dec. 8, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.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 As of December 8th, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.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 Mortgage Success with Making Home Affordable
Filed under FHA Mortgagee Letters, FHA news, Hope for Homeowners, Making Home Affordable, Mortgage News, Published Articles · Tagged: Hope for Homeowners, Making Home Affordable
The past week we saw the State of California pass a law that banned advance fees for loan modification companies with the announcement that more than 500,000 FHA loan modifications in progress under the Making Home Affordable program. These are better results for FHA that saw very few homeowners receive mortgage relief with the Hope for Homeowners and FHA Secure refinance products. What we had before 949 applications under the Hope for Homeowners Program and only 1 mortgage approval. The FHA Secure program allowed only 3,794 delinquent borrowers who had conforming mortgages to refinance with FHA mortgage lending in 2008.
In contrast, the Obama Administration reports that 2,484,783 borrowers have sought information under the Home Affordable Modification Program (HAMP) through the end of September. Of this number, 757,955 were offered three-month trial modification and 487,081 loan modification agreements have begun. If the borrower makes three lower payments during the trial period then the loan is permanently changed to that lower rate and hopefully the home is saved from foreclosure.
New FHA Guidelines for Condos
Filed under FHA Mortgagee Letters, FHA news, Mortgage News · Tagged:
Under revised guidelines set to go into effect November 2, 2009, the Federal Housing Administration is implementing a new stricter approval process for condominiums to be eligible for FHA home financing. Similar in some respects to the new Fannie Mae regulations issued earlier in the year, the FHA guidelines will surely slow down condominium mortgage financing, and negatively impact first time home buyers for condominium units.
The FHA mortgage loan program designed to help more people finance homes, and more borrowers will qualify with FHA financing than with conventional financing. It is a low down payment (3.5% down) program and the credit standards are much looser. The mortgage rates are typically better, as well.
New Project Eligibility Guidelines
All condominiums (consisting of 2 or more units) must meet the following requirements:
• At least 50% of the units of a project must be owner-occupied or sold.
• Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
• No more than 15% of units can be in arrears of their condominium fees.
• No more than 25% of the property’s total floor area in a project can be used for commercial purposes.
A current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. The regulations don’t define what is “adequate” but guidance may be found in the new Fannie Mae guidelines which mandate at least 10% of annual operating budget in reserves.
• No more than 10% of the units may be owned by one investor.
• Rights of first refusal are permitted unless they violate discriminatory conduct under the Fair Housing Act.
• An affirmative action-type housing plan is required for both new construction and conversions.
• Previously certified projects must re-apply every 2 years.
• The “spot approval” process is eliminated in favor of a more comprehensive review process.
The net effect of these new guidelines, combined with the recent Fannie Mae guidelines, is that it will be much tougher to obtain condominium financing as many projects will not be able to pass muster. Condominium associations, trustees, managers, lenders and buyers need to prepare and do a lot more work to approve condominium loans.
FHA Loan Modification Guidelines
Filed under FHA FAQ, FHA news, Mortgage News, Published Articles · Tagged: FHA Loan Modification, FHA loan modification guidelines, FHA mortgage, FHA mortgage programs, FHA requirements, FHASecure, mortgage refinance loans
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 Mortgage Loans Introduced to Stimulate Markets as Housing Recovery Faces Challenges
Filed under FHA First Time Home-Buyers, FHA news, Mortgage News, Published Articles · Tagged: 1st time homebuyers, current mortgage payments, FHA, FHA loan, FHA Mortgage Loans, FHA mortgage rates, home foreclosures, mortgage refinancing, refinance
A recent rise in mortgage rates and rising foreclosures and job losses are just a few of the challenges standing in the way of a lasting recovery, economists say. New FHA loan programs have helped struggling homeowners qualify for mortgage refinancing. In addition FHA announced new financing incentive for 1st time homebuyers with attractive incentives to finance a new home. HUD created these new FHA mortgage lending programs in an effort to stimulate the real estate market that has been sluggish nationwide for several years. With the economy ailing, affordability remains the primary concerns for most Americans considering financing a home.
The US residential real estate market is caught in the worst correction in decades with few reasons to be optimistic as the economy worsens, according to a key housing report released Monday. “Despite unprecedented federal efforts to stimulate the economy and help homeowners make current mortgage payments, house prices continued to fall and home foreclosures continued to mount in most areas through the 1st quarter of 2009,” according to the executive summary of the State of the Nation’s Housing annual report released by Harvard University’s Joint Center for Housing Studies. “While new and existing home sales and single-family starts have shown some signs of stabilizing, ongoing job losses, house price deflation and tighter mortgage underwriting and credit are placing any recovery at risk,” the report said.
“Although there are some signs of improvement or at least steadiness in new construction and sales, housing starts stand near 60-plus year lows, and any life in home sales is coming from distressed foreclosure sales, temporary 1st -time buyer tax credits and low mortgage interest rates for purchase and refinance that moved higher in recent weeks,” said Nicolas Retsinas, director of Harvard’s Joint Center, in a press release. “The best that can be said of the market is that house price corrections and steep cuts in housing production are creating the conditions that will lead to an eventual recovery,” added Eric Belsky, executive director of the Joint Center. “For now, markets remain under considerable stress,” Belsky said.
The bleak study coincided with a separate report from the World Bank warning of more damage in the global economy. This week, investors will be focusing on housing data and any commentary the Federal Reserve offers on the economy. “On the economic front, new and existing home sales should show improvement but from very low levels,” said David Kelly, chief market strategist at JPMorgan Funds. “The recent back-up in FHA mortgage rates, although unwelcome, really should not be enough to prevent pent-up demand and still very good affordability from triggering a housing rebound.” Resource: John Spence, Jeff Moran
