Thursday, June 10, 2010
Escrow Holdbacks?
We have programs that allow for escrow holdbacks. These programs will allow you to finish an unfinished property or bring a property up to the minimal FHA standards after closing.
Friday, February 12, 2010
HUD Confirms Appraisal Changes Feb 15, 2010
HUD Confirms Appraisal Changes Feb 15, 2010
FHA announced today that the February 15,2010 Appraisal compliance changes WILL NOT CHANGE
As indicated in the industry email of December 22, 2009, enactment of ML 2009-28 (Appraiser Independence) WILL be implemented February 15, 2010. ML 2009-28 (originally planned for a January 1, 2010 implementation) 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 take effect for all case numbers assigned on or after February 15, 2010.
This extension has allowed FHA and lenders additional time to adjust systems to accommodate the changes. Detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter, which was delayed due to federal offices being shut down the week of February the 8th and will be released the week of February 15th.
However, lenders will be able to secure a case number assignment in FHA Connection via the Case Number Assignment Screen without inputting the appraiser information. The Case Number Assignment Screen will no longer capture the assignment choice, license ID and assignment date. Instead, lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Logging Screen once the completed appraisal is received by the lender and prior to closing the loan.
FHA announced today that the February 15,2010 Appraisal compliance changes WILL NOT CHANGE
As indicated in the industry email of December 22, 2009, enactment of ML 2009-28 (Appraiser Independence) WILL be implemented February 15, 2010. ML 2009-28 (originally planned for a January 1, 2010 implementation) 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 take effect for all case numbers assigned on or after February 15, 2010.
This extension has allowed FHA and lenders additional time to adjust systems to accommodate the changes. Detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter, which was delayed due to federal offices being shut down the week of February the 8th and will be released the week of February 15th.
However, lenders will be able to secure a case number assignment in FHA Connection via the Case Number Assignment Screen without inputting the appraiser information. The Case Number Assignment Screen will no longer capture the assignment choice, license ID and assignment date. Instead, lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Logging Screen once the completed appraisal is received by the lender and prior to closing the loan.
Thursday, February 4, 2010
FHA has increased Upfront Mortgage Insurance Premiums (“UFMIP”) for most FHA programs to 2.25 percent. Purchase money and full credit qualifying refinance transactions have increased from 1.75 percent to 2.25 percent. Streamline refinances, with or without an appraisal, have increased from 1.50 percent to 2.25 percent.
The UFMIP for the H4H program will remain at 2.00 percent and the UFMIP for HECM (reverse mortgages) will also remain at 2.00 percent. In addition, UFMIP for Title I, Section 247, Section 248, Section 223(e) and Section 238(c) programs have not changed.
At this point in time, there are no changes to the annual mortgage insurance premium (“MIP”). FHA reserves the right to make changes, but it will require legislative action. The annual premiums, which are remitted on a monthly basis, are a factor of the loan term and loan-to-value ratio. For now, these factors continue to be:
Terms > 15 years
LTV > 95% 0.55%
LTV < 95% 0.50%
Terms < 15 years
LTV > 90% 0.25%
LTV < 90% None
How does it change or benefit the industry:
The UFMIP 50 basis points increase for full credit qualifying transactions and the 75basis points increase for streamline refinance transactions will have an immediate impact on improving FHA’s capital reserve funds, which dipped below the two percent threshold at the end of the last fiscal year. FHA says it intends to seek legislative authority to increase the annual MIP. If this authority is granted, FHA may consider shifting some of the UFMIP premium increase to the annual MIP.
The UFMIP for the H4H program will remain at 2.00 percent and the UFMIP for HECM (reverse mortgages) will also remain at 2.00 percent. In addition, UFMIP for Title I, Section 247, Section 248, Section 223(e) and Section 238(c) programs have not changed.
At this point in time, there are no changes to the annual mortgage insurance premium (“MIP”). FHA reserves the right to make changes, but it will require legislative action. The annual premiums, which are remitted on a monthly basis, are a factor of the loan term and loan-to-value ratio. For now, these factors continue to be:
Terms > 15 years
LTV > 95% 0.55%
LTV < 95% 0.50%
Terms < 15 years
LTV > 90% 0.25%
LTV < 90% None
How does it change or benefit the industry:
The UFMIP 50 basis points increase for full credit qualifying transactions and the 75basis points increase for streamline refinance transactions will have an immediate impact on improving FHA’s capital reserve funds, which dipped below the two percent threshold at the end of the last fiscal year. FHA says it intends to seek legislative authority to increase the annual MIP. If this authority is granted, FHA may consider shifting some of the UFMIP premium increase to the annual MIP.
Thursday, January 28, 2010
HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS
Measure to help bring stability to home values and accelerate sale of vacant properties
WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.
"As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers," said Donovan. "FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization."
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
"This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said.
In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-
day period of time. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity." The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
•In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
•The waiver is limited to forward mortgages, and does not apply to the Home Equity
Conversion Mortgage (HECM) for purchase program.
•Specific conditions and other details of this new temporary policy are in the text of the waiver,
available on HUD's website.
Measure to help bring stability to home values and accelerate sale of vacant properties
WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.
"As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers," said Donovan. "FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization."
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
"This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said.
In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-
day period of time. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity." The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
•In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
•The waiver is limited to forward mortgages, and does not apply to the Home Equity
Conversion Mortgage (HECM) for purchase program.
•Specific conditions and other details of this new temporary policy are in the text of the waiver,
available on HUD's website.
Monday, January 11, 2010
HUD Repeals FHA Origination Fee Cap
The U.S. Department of Housing & Urban Development (HUD) has issued Mortgagee Letter 2009-53 that eliminates the one percent loan origination fee limit on Federal Housing Administration (FHA) loans, but provides that the FHA will monitor lenders to ensure they are charging "fair and reasonable" fees for all origination services and that it intends to issue future guidance containing fee limits. The letter also clarifies the manner in which fees and charges for FHA-insured loans must be disclosed on the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement.
The U.S. Department of Housing & Urban Development (HUD) has issued Mortgagee Letter 2009-53 that eliminates the one percent loan origination fee limit on Federal Housing Administration (FHA) loans, but provides that the FHA will monitor lenders to ensure they are charging "fair and reasonable" fees for all origination services and that it intends to issue future guidance containing fee limits. The letter also clarifies the manner in which fees and charges for FHA-insured loans must be disclosed on the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement.
Monday, January 4, 2010
Enactment of ML 2009-28, Appraiser Independence, will be delayed until February 15, 2010
Enactment of ML 2009-28, Appraiser Independence, will be delayed until February 15, 2010. ML09-28 (originally planned for a January 1, 2010 implementation) 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 and lenders additional time to adjust systems to accommodate the changes.
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, 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 loan.
Delayed Implementation Date for ML 2009-51
ML 2009-51, Adoption of the Appraisal Update and/or Completion Report, states an effective date of January 1, 2010. The effective date is being extended and will now apply to all case numbers assigned on or after February 15, 2010. This extension will provide additional time needed by FHA and lenders to adjust their systems to accommodate use of the form.
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, 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 loan.
Delayed Implementation Date for ML 2009-51
ML 2009-51, Adoption of the Appraisal Update and/or Completion Report, states an effective date of January 1, 2010. The effective date is being extended and will now apply to all case numbers assigned on or after February 15, 2010. This extension will provide additional time needed by FHA and lenders to adjust their systems to accommodate use of the form.
HUD REMOVES 1% ORIGINATION FEE CAP
The U.S. Department of Housing and Urban Development ("HUD") released Mortgagee Letter 2009-53, which removes the 1% origination fee cap on FHA-insured loans originated under FHA's standard mortgage insurance programs. HUD made this change to be consistent with recent revisions to regulations under the Real Estate Settlement Procedures Act ("RESPA"), which, as of January 1, 2010, will require mortgage lenders to disclose a single, bundled origination fee on the Good Faith Estimate and HUD-1 Settlement Statement. As this single origination charge must include all administrative and processing fees related to the origination of the loan, as well as both the mortgage lender's and mortgage broker's compensation, HUD recognized that this aggregate charge will often exceed the 1% origination fee cap. Accordingly, to match changes made to Section 203.27 of FHA regulations, HUD will no longer limit the amount of the origination fee charged to FHA borrowers. (Limits remain on the amount of origination fees charged in connection with Home Equity Conversion Mortgages and Section 203(k) Rehabilitation loans.)
Before FHA lenders get excited about unlimited origination charges, HUD reminds lenders that their fees must continue to be "fair and reasonable" for the origination services performed in connection with FHA loans. Moreover, HUD makes clear that it intends to issue additional guidance on the amount of fees that FHA lenders may charge their borrowers. Don’t be surprised if this additional guidance is released in early 2010 and results in a percentage cap on the overall amount of fees that can be charged to the FHA borrower. For now, however, HUD's deregulation of the 1% origination fee cap is welcomed news for FHA lenders ready to comply with RESPA's new disclosure requirements.
Before FHA lenders get excited about unlimited origination charges, HUD reminds lenders that their fees must continue to be "fair and reasonable" for the origination services performed in connection with FHA loans. Moreover, HUD makes clear that it intends to issue additional guidance on the amount of fees that FHA lenders may charge their borrowers. Don’t be surprised if this additional guidance is released in early 2010 and results in a percentage cap on the overall amount of fees that can be charged to the FHA borrower. For now, however, HUD's deregulation of the 1% origination fee cap is welcomed news for FHA lenders ready to comply with RESPA's new disclosure requirements.
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