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November 27, 2011

Higher FHA Loan Amounts Extended by Congress

Category: FHA Mortgage,Mortgage News,Published Articles – admin – 5:15 pm

After months of mortgage relief talk, Congress passed a bill that would increase FHA mortgage limits. This was a government compromise that would help homeowners with less than perfect credit get rid of their bad credit mortgage with a record low fixed interest rate. With higher FHA loans, borrowers will have more home loan choices. The fact is that new home buyers and people looking for an affordable refinance would see higher amounts in more than 660 markets across the country. Congress raised loan limits for FHA home loans while leaving loan ceilings untouched for Fannie Mae and Freddie Mac. In effect, this may make FHA the go-to financing option for borrowers needing loans up to $729,750 with down payments as low as 3.5 % in higher cost regions of California; Washington, D.C.; New York, New Jersey and in other states including Massachusetts, Florida and North Carolina.  Fannie Mae and Freddie Mac home mortgage loan programs in those areas, meanwhile, stay capped at $625,500. Equally important, the new plan raises the FHA ceilings for purchasers in hundreds of more moderate-priced markets. For Seattle-area buyers’ the maximum FHA loan amounts jumped to $567,500, while the Fannie Mae-Freddie Mac ceiling remains at $506,000. In Hartford, Connecticut, the limit for FHA is now $440,000 up from $320,850 yet the maximum loan amount for Fannie Mae and Freddie Main are limited to $417,000.

Home buyers with low down payments in Portland, Oregon, who previously had been limited to FHA mortgages of $362,250, can borrow up to $418,750 under the new plan, $1,500 more than they can get from Fannie and Freddie, which generally require steeper down payments and higher credit scores. The new loan ceilings in hundreds of markets are at the core of the compromise: They raise the maximum FHA loan amount in all areas of the country to 125% of the local median home-sale price, while leaving Fannie Mae’s and Freddie Mac’s limit at 115% of median.

What motivated Congress to create separate and unequal rules that transform FHA traditionally a haven for moderate income, first-time buyers with minimal cash — into a key source of financing for buyers in the upper as well as mid-bracket markets? Nobody in Congress actually proposed this idea at the start. By a 60-38 vote in October, the Senate passed an amendment raising all three agencies’ limits to $729,750 in high cost areas and 125% of the median sale price elsewhere. The goal lobbied aggressively by realty and homebuilding groups was to inject needed oomph into lagging home sales. But Republicans in the House balked at doing anything that might prolong the existence of Fannie and Freddie, both the targets of scathing criticism for their multibillion costs to taxpayers and big bonuses for top executives. What ultimately emerged from the legislative scrum was the current compromise penalizing Fannie and Freddie, while boosting FHA. House Republicans weren’t enthusiastic about helping FHA, either the agency faces its own financial challenges but unlike Fannie and Freddie, FHA is subject to congressional appropriations and closer oversight. Republican critics held their noses and voted for the plan. What will this mean for buyers from now through the end of 2013, when the compromise expires? “There’s no doubt this will drive more business to FHA,” said David H. Stevens, former FHA commissioner.” Read the rest of the Daily Herald Article Here.

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November 15, 2011

Will the Government Raise Loan Limits on FHA, Fannie and Freddie?

Category: FHA Mortgage,Mortgage News – admin – 4:50 pm

Many members in the House and the Senate appear to be leaning towards raising FHA loan limits just a month after passing a bill to lower the mortgage limits for Fannie Mae, Freddie Mac and FHA. The Obama administration appears to be all over the map regarding the reduction of FHA limits. After expressing support to extend the higher FHA loan amounts going forward into 2012, the Administration is now saying that they back HUD’s decision to lower the FHA limits in 2012.

Are Stated Income Mortgages Still Available Today? Yes, the FHA streamline is often considered a no income refinance program because income documentation like W2′s and pay-stubs are typically waived for existing FHA customers.

Reuters reported that the Obama administration believes that letting the FHA limits expire will encourage the process of winding down the government’s involvement in the mortgage market and enable new investments with private money driving the mortgage market once again. It’s no secret that FHA reserves sit at all-time lows, so many executives in the mortgage environment have been voicing their concerns about the future role of government mortgage financing.

Will the HARP Rules and Expanded Refinancing Guidelines Help Stem the Foreclosure Crisis?

Many industry managers believe that the Home Affordable Refinance Program could fill the void for many distressed homeowners who needed the FHA loan programs because they are less strict when it comes to equity and loan to value requirements. The new HARP mortgage guidelines have eliminated all loan to value restrictions, so that equity will no longer be an issue for eligible homeowners seeking affordable home refinancing.

The Acting Commissioner at the Federal Housing Administration, Carole Galante reiterated Tuesday the agency’s position that the expired FHA limits would have little impact. These account for only 5% to 6% of the FHA portfolio. She also said re installing them wouldn’t necessarily be a negative jumbo loans either since these are usually higher-credit borrowers.  However, the consequence of expanding the limits for FHA but not Fannie and Freddie is simply unknown, she said. Galante continued, “This is a situation that has never occurred before, where FHA would have the higher loan limits and Fannie and Freddie would not. It’s hard for us to make any kind of prediction for how much of that business would come to the FHA without finding any other sort of alternatives.”

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March 1, 2011

The Truth About FHA Loan Programs

Category: FHA Mortgage,Published Articles – admin – 12:44 am

The FHA Loan Blog, posted an interesting article the reveals some insight about the popular FHA loan programs.

  1.  You do not have to have a government job to qualify for an purchase or refinance with a FHA mortgage.
  2.  FHA rates are not higher than conventional interest rates.
  3.  FHA home loans are not just for 1st time homebuyers.
  4.  Mortgage insurance is not required with FHA loans on 15–year terms at or below 90% LTV.
  5.  No cash out is allowed on the FHA Streamline.

Read the original article, 10 Myths about FHA Loans.

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December 21, 2010

Tips for FHA Streamlining

Category: FHA Mortgage,Published Articles – admin – 7:20 pm

1. What does a borrower need to qualify for a FHA streamline refinance?

The first key component is that borrowers must presently have a FHA loan.

• Borrowers must have made at least 6 months’ worth of FHA mortgage payments.

• No mortgage payments can have been reported as “late” or delinquent” on the loan over the last year.

2.  Is there a home appraisal needed for qualification purposes?

In most cases, there is no formal appraisal required for FHA streamlines. This helps many underwater borrowers refinance in a pinch. Some borrowers who have no equity issues may want to do an appraisal because it enables them to finance their closing costs.  Last year, HUD changed the FHA loan guidelines to no longer allow borrowers to finance lender closing costs on the standard FHA streamlines.  No cost FHA loans are available to qualified borrowers, so discuss your eligibility for no cost refinancing.  This means that if your lender charges for processing, underwriting, title, escrow and loan origination that you will have to pay for these streamline refinance closing costs unless you qualify for a no cost FHA streamline.

3. Does a FHA streamline require income documentation?

In most cases with a FHA streamline refinance if the borrower is a salaried employee, the underwriter will not ask for income documentation like paystubs or W2’s.  However they will verify with your employer that you are still currently working with the company in the position that you stated on your residential loan application.

Read the original article > 3 Secrets of FHA Streamlines online.


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November 19, 2010

FHA Mortgage Modifications

Category: FHA Mortgage – admin – 12:23 am

FHA reserves remain at dangerously low levels but defaults have been decreasing.  The portfolio for FHA home loans appears to be improving.  Some of the Federal Housing Administration’s largest servicers lacked the technology and staff to expedite the processing of FHA loan modifications, and were unprepared to deal with the escalating backlog of requests, according to FHA commissioner David Stevens.  HUD initiated a review of its five largest servicers in May, analyzing their servicing and loss mitigation operations. The agency’s review is ongoing.  “The field analyst reviews suggest that some servicers may lack knowledge of the FHA loss mitigation process,” Stevens told a congressional panel Thursday morning.

FHA is working with its top servicers to address the problems and improve their loss mitigation performance.  “This includes extensive consultation with servicers’ senior management and assigned work groups, customized training and planning assistance, and ongoing evaluations of the servicers’ progress in correcting deficiencies and improving compliance,” Stevens testified.

FHA plans to conduct reviews of the next five largest FHA servicers in the winter and early spring, according to Vicki Bott, head of the agency’s single-family program.  The government insurer plans to subject all of its servicers to these “broad in-depth” servicing reviews.  “We will take action where necessary,” Bott said at a property preservation conference earlier in the week.

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August 2, 2010

HUD Suspends 905 FHA Mortgage Lenders

Category: FHA Mortgage,Loan Origination News,Mortgage News – admin – 10:26 am

The FHA Mortgage Review Board sent a message to FHA lenders across the nation.  “If you want to originate FHA loans, then do not commit mortgage fraud.”  The government review board yanked its approval stamp from 905 national FHA mortgage lenders for 1 year.  An additional 147 FHA lenders were said to have failed to timely meet requirements for annual FHA re-certification, but are now in compliance.

The HUD Reform Act of 1989 established the Mortgage Review Board with the goal of to monitoring approved FHA lenders for violations of the agency’s program requirements.  The question is — Will the lenders survive for a year without the ability to originate FHA home mortgage loans?

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May 18, 2010

Merging Fannie Mae and Freddie Mac

After several mortgage bailouts a no end to loan defaults insight, it is not unreasonable to ask the question —- Why do we need both Fannie Mae and Freddie Mac?  In a recent article in the Huffington Post, a strong recommendation from the editor arose for Fannie Mae and Freddie Mac to clean up their act and merge the two government mortgage giants. The Huffington blog called for a new strategic plan for Fannie and Freddie to find a common goal and merge. The federal government has gotten tangled too deep in this mortgage mess and many believe if they continue it will significantly prolong the recession.  The FHA mortgage loan programs have been able to recover so why can’t Fannie and Freddie follow suit?

The Post points out that merging Fannie Mae and Freddie Mac to form “Fannie Mac” is a logical step to shift responsibility to new stockholders. The plan will also return the taxpayers’ subsidies to the Treasury.  Both GSEs have similar missions. Most of their loan programs are comparable and the merger is logical. The new Fannie Mac will trim its staff and get rid of highly paid senior and middle management who perform the same functions.   The GSEs have one-to-four family, home-lending divisions that buy home loans from banking institutions. They have separate divisions to purchase multifamily loans for rental properties with five units or more. Some of the programs within each division are similar enough to be combined and further reduce the company’s size.  These government mortgage companies need to dispose of the dispose of their toxic assets like the loan defaults, and bad credit home loans.

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May 10, 2010

Get Updated on FHA Guidelines

Category: FHA Mortgage,Loan Origination News – admin – 8:16 am

The National Mortgage News reported that because of the increased  risks associated with FHA mortgage loans, the U.S. Department of Housing and Urban Development finalized regulations that will dramatically change the delivery of FHA loans to the public. The key changes announced by HUD eliminate loan correspondent approval, increase net worth requirements for FHA-approved lenders up to ten times what is currently required, and amend principal-agent relationship requirements. FHA mortgage rates have helped stimulate interest because housing has become more affordable than ever.

The new regulations bring huge changes to the FHA mortgage program, which will be upon us by May 20th. It is critical that all FHA-approved lenders, as well as those mortgage lenders and brokers interested in participating in FHA programs, understand how these regulatory changes will affect their FHA lending activities.
This one-hour webinar will help you learn more about these new regulations FHA guidelines and how they will impact your business. There will be time at the end of the webinar for questions.  Registration closes at 5 p.m. EDT on May 11th.  To get signed up, visit http://www.klgates.com/events/Detail.aspx?event=2291

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February 9, 2010

Saving Money When Refinancing Your Mortgage

It is very important that you consider the lending costs and benefits when comparing mortgage refinance loans. Charles and Nancy Henson refinanced their home mortgage last year, and Charles Henson says it was not a difficult decision. “The mortgage rates had dropped, and we wanted to do something a little more secure,’’ he said. “Our previous rate was 5.625%. We ended up locking our home loan at 4.875%.’’ The current mortgage rates have spurred many to consider mortgage refinancing – basically replacing one loan with another. Depending on the new loan’s terms, it can save you tens of thousands of dollars.

Each refinance mortgage is its own case, due to many factors: your loan, your credit, your home’s equity, the interest rate, the cost of the refinancing, and so on. Some things to consider:

■ Interest rate. “If you can save half a point or more on your interest rate, that can be a good indicator to refinance,’’ said Kay Sandusky of Citizens National Bank of Southwestern Ohio. Sandusky added: “If it is going to cost you $2,000 to do the refinance and you are saving $200 per month, do the math and consider how long you will be in the home and if that is a savings to you.’’ “How long you’re going to be in the home is a big factor,’’ Penner said. “If someone is going to live in the house three to five years, [refinancing] may not be a great idea.’’
■ Total cost benefit. Kim Penner of Union Savings Bank said you have to consider total costs when considering refinancing. “Your lowest interest rate alone is not always your best deal,’’ Penner said. “You have to see if it makes sense to get a lower rate if your costs are high.’’
■ Short term vs. long term. “Think about what term of loan you want,’’ Penner said. “Is cash flow an issue? Are you looking at retiring?’’ He added that the sooner you pay off a loan, the more you save on interest payments. “The difference in interest could be $40,000, $50,000, $60,000,’’ Penner said. Henson is retired and his wife is self-employed, but he said they chose a 30-year rate because it was a more conservative approach, given the economic climate. They “decided we could make a 30-year into a 15 by paying more on the principal each year,’’ Henson said. “With a 30-year rate, you have the flexibility if you want to pay extra.’’
■ Credit score. Borrowers who have at least a 740 get the best terms. If your credit score is lower, you can still get a loan, but at a higher interest rate.
■ Know your home’s equity. “You have to have 20% home equity ask for a conventional home loan without private mortgage insurance,’’ Sandusky said, though there are other options. FHA home loans have mortgage insurance, but if your credit is outside of the conventional box or if you have no equity, talk to a FHA mortgage company, because these government loans may be your best option for refinancing.
■ Talk to a professional. “I ask a lot of questions about the borrower and offer options,’’ Penner said. Be careful shopping for a mortgage online. Don’t let banks obtain your credit report each time. “Multiple inquiries on your credit report in a short period of time can harmful to your credit,’’ Sandusky said. “Know your credit and tell the bank.’’

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January 28, 2010

Federal Housing Administration Suspends FHA Lenders

Category: FHA Mortgage,Loan Origination News,Mortgage News – admin – 12:27 am

The Federal Housing Administration is following through on promises to come down hard on FHA mortgage lenders. The federal mortgage insurer on Monday said it had pulled the licenses of three lenders and was suspending a fourth FHA lender.

The FHA said it would eject Strategic Mortgage Corp., of Oklahoma City, Okla.; ProMortgage Inc., of Claremore, Okla.; and Americare Investment Group Inc., of Arlington, Texas. It suspended Home Mortgage Inc., of Burr Ridge, Ill., for six months. The FHA said it ejected Strategic and ProMortage for failing to uphold FHA loan standards, including charging excessive fees and having poor quality controls. Americare violated terms of a previous settlement, and Home Mortgage failed to disclose the indictment of a part-owner, it said.

Representatives for Strategic and ProMortgage didn’t respond to inquiries seeking comment. Americare and Home Mortgage couldn’t be reached.  The FHA, which doesn’t make loans but insures lenders against losses, has seen its capital cushion erode sharply amid rising mortgage defaults. Officials have promised to be vigilant in cracking down on lenders it believes are putting the agency’s reserves at risk

.

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December 29, 2009

Revised Good Faith Estimate for Mortgage Brokers, Lenders and Loan Officers

Mortgage professionals will have to get used to a new “Good Faith Estimate” to be disclosed in 2010. The U.S. Department of Housing and Urban Development (HUD) has updated and re-released “Shopping for Your FHA loan: HUD’s Settlement Cost Booklet.”  A large share of content in the 49-page publication, which helps consumers comparison-shop mortgages, addresses the standardized Good Faith Estimate (GFE) and HUD-1 settlement statement forms that lenders must start using on Jan. 1, 2010.

HUD estimates that consumers could save almost $700 in costs and fees per mortgage loan on average as a result of the new requirement, which is one of several changes to the Real Estate Settlement Procedures Act (RESPA).  In addition to the updated literature, the agency has set up a RESPA “FAQ” section and other information on a dedicated RESPA page so that consumers, settlement service providers and lenders can gain a better understanding of the new rules.

Here is the location of the .pdf of the booklet that you can save or print out for your reference. http://portal.hud.gov/portal/page/portal/HUD/documents/Settlement Booklet December 15 REVISED.pdf

Mortgage lenders are now required to provide loan applicants with the following:

- Good Faith Estimate—provided at the time of application to borrowers to outline the home loan terms and Total settlement costs.

- HUD-1/HUD-1A Settlement Statements—to inform borrowers of final costs at settlement.

- Servicing Disclosure Statement—to inform the borrower whether another financial institution may be servicing their loan.

- Settlement Cost Booklet—provided within three days of application to inform the borrower of fees involved in home purchase settlement.

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December 14, 2009

FHA Guidelines Being Revised for Refinance and Purchase

Category: FHA Mortgage,Mortgage Lender Tips,Mortgage News – admin – 6:06 pm

HUD announced they were making changes to the guidelines for with FHA mortgage products.  The Federal Housing Administration still has money, but its loan reserves are depleting to dangerously low levels.  FHA’s capital reserves are supposed to be 2% of outstanding loans. According to the actuarial review for fiscal year 2009, the reserves are a mere 0.5%. By the time you read this, FHA loan reserves might have disappeared entirely, thanks to the increasing number of FHA home foreclosures.  All FHA borrowers pay a mortgage insurance premium. These premiums go into the FHA’s capital reserves fund and are used to pay for home loans that are foreclosed upon. As FHA loan refinance and purchase mortgages have become much more popular, and the unemployment numbers have risen, more of these loans have gone bad, requiring more payments from the capital reserves.

Unlike the Federal Deposit Insurance Corporation , which recently proposed that banks pay three years of insurance premiums at once in order to replenish the FDIC’s reserves, FHA can’t require current borrowers to pay more. But it can change the rules going forward that will make it more difficult to qualify for an FHA loan.  According to a senior official at the Department of Housing and Urban Development , conversations are ongoing to determine what will make the most sense.  “Nothing will be taken off table,” the official said. “Everything needs to be assessed through the lens of the FHA core mission as well as the broad economic policies of the Administration with regard to stabilizing housing.”

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