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FHA changes – here’s a quick run-down

On February 3, 2010, in FHA Mortgages, by Todd Abelson | Comments

I’ve received alot of calls asking me to summarize the “wassup in FHA?” Here’s quick run-down for your reference:

2/1       New condo rules begin.  All condos must show as “Approved” on the FHA website  https://entp.hud.gov/idapp/html/condlook.cfm. Select the HRAP/DELRAP option for searching.  I usually just enter the zip code and select “All”.  Many condos have different names or spellings and I find it helpful to check all of them in a zip code.  There aren’t that many.  No more “spot approvals” allowed by FHA. 

2/1       Effective until 2/1/2011 the 90 day flipping rule has been suspended.  HOWEVER, the loan must be an arm’s length transaction and if the value increases 20% over the seller’s acquisition price then we have to get a home inspection and justify all repairs, renovations, etc. with documentation.

2/15    HVCC rule applies to FHA loans.  The FHA Connection has been revised (which is what caused the delay in implementation). No more Originator-to-Appraiser communication allowed, just like with Conventional loans.

4/5       New up front MIP for all loans including streamline refinances is 2.25%. This will make every loan at least 1/2 point MORE EXPENSIVE.

Other changes “coming this summer to a Lender near you”… increased Monthly Mortgage Insurance and increased downpayment requirements for low-FICO borrowers. Standby for updates as they are announced.

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage in Tucson, Arizona for all your Mortgage needs!

FHA Increases Mortgage Insurance Premiums

On January 24, 2010, in FHA Mortgages, Mortgage Educational Information, Mortgage Programs & News, Tyler Ford & Todd Abelson, by Todd Abelson | Comments

It’s official! FHA is increasing the up-front mortgage insurance premium to shore up it’s finances. Beginning with case numbers assigned on Apri 5th, 2010 the fee increases from 1.75% to 2.25%. Almost as importantly, the fee for Streamline refinances increases from 1.50% to 2.25%. This makes the FHA loan 1/2 point more expensive than before.

As I’ve said before, FHA is balancing their shortfalls from yesterday’s defaults with tomorrow’s borrower.

The Monthly Mortgage Insurance factors will be increasing “this summer” but nothing official released yet. The remain the same for the time being…

Click here to see the official Mortgagee Letter

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage for all your Mortgage Needs!

FHA to increase Mortgage Insurance & Down Payment

On January 21, 2010, in FHA Mortgages, Market News, Mortgage Programs & News, Tyler Ford & Todd Abelson, by Todd Abelson | Comments

In an attempt to recoup past losses, reduce the potential for future losses and sure up FHA’s sagging reserves a staggering series of changes will be implemented “soon”. Click here for article

First, and most immediate, the Up-Front MIP for all FHA loans will be increased from 1.75% to 2.25%. The start date for this increase will be announced today but Ianticipate it will begin with case numbers assigned starting February 1st. Following this in “the spring” will be an increase in the monthly MI fee as well.

Second, down payment requirements will be increase for 3 1/2% to 10% for “low FICO score borrowers” (under 580). This change is expected to be implemented “early summer”.

Third, the level of allowable “Seller Concessions” will be cut in half from 6% to 3%; this also will be implemented “early summer”.

Fourth, increased monitoring and enforcement on FHA lenders effective immediately.

These changes are H-U-G-E and will affect the entire market. While just loosening the anti-flipping rules 48 hours ago, this changes tighten – good for taxpayers, bad for sellers, buyers and the real estate markets.

For these and other breaking stories, stay in touch and call Todd Abelson and Tyler Ford at Sunstreet Mortgage in Tucson Arizona.

Spring 2010 FHA Guidelines Make Borrowing Tougher And More Expensive

On January 21, 2010, in FHA Mortgages, by admin | Comments

New FHA guidelinesSecuring an FHA mortgage in Arizona is about to get more expensive.

In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group’s portfolio risk while strengthening its overall financials.

For consumers, the changes mean higher costs.

As listed in the official announcement, there are 3 major guideline updates for the FHA:

  1. Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%
  2. Minimum downpayments for applicants with sub-580 FICOs are rising to 10 percent
  3. Seller concessions are being limited to 3%, down from today’s allowable 6%

Furthermore, the FHA has appealed to Congress to raise an FHA borrowers’ monthly mortgage insurance premiums.

To read the FHA’s statement, it’s clear what the group is trying to balance.  On one side, the FHA wants to provide affordable financing to families that need it. That’s its mission statement. On the other side, though, the FHA must manage the risk that comes with insuring lesser-quality loans.

To that end, the FHA is stepping up its enforcement of “bad lenders” in hopes of stopping problems where they start.

Also in its new policies, the FHA is introducing a “termination clause”. If banks or loan officers that produce more than their fair share of bad loans, they lose their right to originate FHA mortgages.

As a result, homebuyers in Tucson should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don’t want to do “bad loans”.  Lenders are incented to turn down at-risk applicants and, already, we’re seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum.

Some have other guideline overlays, too.

The FHA’s new guidelines don’t go into effect until spring.  So, between now and then, the old guidelines will apply.  Therefore, if you know you’re going to need an FHA home loan in the next few months, consider moving up your time-frame.

If nothing else, you’ll save some money at closing.

FHA Waives 90-day Anti-flipping rule!

On January 19, 2010, in FHA Mortgages, Mortgage Programs & News, Tyler Ford & Todd Abelson, by Todd Abelson | Comments

Effective February 1, 2010 FHA is eliminating a rule that they FINALLY agree has been negatively affecting the Real Estate market given it’s current condition. Previously, a property was not eligible for FHA financing if it was being sold within 90-days of the last sale UNLESS it was a bona fide foreclosure from an institutional lender or non-profit agency (other limitations applied). The goal was to eliminate predatory “flipping” which did little more than jack up the price of housing.

However, there are MANY investors taking advantage of the current market by buying substandard homes acquired through foreclosure, then performing “floor to roof” remodels and selling to occupant buyers. Such ventures clearly helped homebuyers BUT these investors were prohibited from reselling for at least 91 days.

In the current ruling (click here for full excerpt), the 90-day seasoning requirement is being waived with the following new conditions:

  1. All transactions must be arms length (no relationship between seller and buyer).
  2. No “identity of interest” deals allowed (no parents-to-kids)
  3. If the sales price is 20% or more over the last sales price the lender must either: a) provide supporting documentation and/or a 2nd appraisal, and b) order an independant inspection on the property and include it with the loan file.

We await the official FHA Mortgagee Letter, but this is clearly great news guaranteed to help both Buyers and Investors!

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage in Tucson Arizona for all your Mortgage needs!

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Recent Comments

  • Tyler Ford: Great job Todd!
  • Tyler Ford: Seems as through the real estate market is picking up and home prices are stabilizing.
  • Gail Richards: Thanks Todd! More Great Information! Thanks for being on top of everything…your the best! Gail
  • admin: Hey Todd, Can’t wait to pick a winner!
  • steve kargel: Thank you Todd for sending us your updates and especially for insights like the Eller annual economic...

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