From HUD: The Housing and Economic Recovery Act of 2008 amends the National Housing Act to authorize a new temporary FHA mortgage insurance program called the HOPE for Homeowners (H4H) Program. Under this Program, certain borrowers facing difficulty in paying their mortgages will be eligible to refinance into affordable FHA-insured mortgages.  The H4H Program is effective for endorsements on or after October 1, 2008 through September 30, 2011.

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Carl Pruitt

FHA Training Source

Streamline 203K FHA Loans - The Basics Part 1 can be found here.

Streamline 203K loans can be used to finance many different types of repairs and improvements. Many originators are surprised by some of the repairs that are eligible to be financed.

Here is the list of eligible repairs and upgrades:

• Repair/Replacement of roofs, gutters and downspouts
• Repair/Replacement/upgrade of existing HVAC systems
• Repair/Replacement/upgrade of plumbing and electrical systems
• Repair/Replacement of flooring
• Minor remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior
• Weatherization, including storm windows and doors, insulation, weather stripping, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
• Accessibility improvements for persons with disabilities
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Repair/replace/add exterior decks, patios, porches
• Basement finishing and remodeling, which does not involve structural repairs
• Basement waterproofing
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement

Here is the list of improvements which are ineligible for financing with a streamline 203k loan:

• Major rehabilitation or major remodeling, such as the relocation of a loadbearing wall
• New construction (including room additions)
• Repair of structural damage
• Repairs requiring detailed drawings or architectural exhibits
• Landscaping or similar site amenity improvements
• Any repair or improvement requiring a work schedule longer than three (3) months; or Rehabilitation activities that require more than two (2) payments per specialized contractor. That would necessitate a “consultant” to develop a “Specification of Repairs/Work Write-Up”
• Improvements which require plans or architectural exhibits
• Improvements which require a plan reviewer
• Improvements which result in work not starting within 30 days after loan closing; or cause the mortgagor to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted. (FHA anticipates that, in a typical case, the borrower would be able to occupy the property after mortgage loan closing)

When borrowers need repairs or improvements from this second list, a regular FHA 203K loan would be required.

In the next segment we will cover how the FHA Streamline 203K process works.

One of the most exciting opportunities today for loan officers and real estate agents alike is the opportunity to sell off the glut of foreclosed homes on the market. A big problem with these potential deals is that most people who are losing their home because they can't make the payments usually lack the money for routine maintenance as well. Once foreclosed upon, those homes hit the market needing some serious sprucing up.

In 2005 HUD came up with a new FHA insured mortgage program they called the "Streamline (K)" Limited Repair Program. The Streamline 203k loan permits homebuyers and those refinancing to borrow up to an additional $35,000 into their mortgage to improve or upgrade their home.

Most loan officers go looking for a special set of guidelines for Streamline 203k loans. There are some specialized guidelines and loan to value rules, but the key thing to remember is that all standard FHA underwriting guides apply just the same way they for any regular FHA loans when it comes to credit, income and asset documentation. This includes decisions reached by both automated underwriting systems and manual underwrites.

Click here for the general criteria for a deal to qualify for the FHA Streamline 203k

As most people who have read this blog for long know, I am a huge fan of the training materials on FHA produced by Chip Cummings. Chip just returned home from the Atlanta HUD Home Ownership Center where he was actually training FHA on how to do FHA!

I use the "ABCs of FHA Lending" manual every day myself. With FHA seeming to change daily lately, keeping up with all the changes in a handy reference is very important.

I'm really excited about a couple of things that Chip has done lately in response to requests from loan officers.

The first is a series of ongoing FHA training calls over the next few days with more to come in the future. There are several different subjects but the two I am most excited about occur on September 24th and September 30th.

One of the most exciting opportunities loan officers will have over the coming months is the opportunity to move ahead of the market as real estate prices go down and help brand new homeowners use FHA loans to buy up all the now lower priced properties sitting on the market.

On September 24th at 1PM EST, there is going to be a great coaching call on "Understanding Short Sales". Click on the link in the last sentence to sign up for the call.

On September 30th at 3PM EST, the coaching call is going to be on another great loan officer niche market that actually ties in with the previous call "Attacking the FSBO Market". Again, click on the link to sign up for the call.

Now for the product I'm most excited about. Chip has produced a series of 7 DVDs with 18 hours of great FHA training including worksheets, checklists and manuals to cover all the bases of making money in the FHA mortgage market. You can purchase the DVDs as a complete set or individually. Go to http://fhatrainingsource.com/fhatraining for more details.

Here are the topics covered:

1.   How to Get FHA Approved in Less Than 60 Days!
2.   Originating FHA Loans - The Right Way!
3.   Processing FHA Loans - From A to Z!
4.   FHASecure and Refinance Transactions
5.   Taking Advantage of Chapter 13 BK's
6.   Marketing FHA Loans to Ultra-Niche Markets!
7.   Rehab Loans - All About 203k's

Of course, I'll keep commenting here on many of these subjects, but when it comes to surviving in the mortgage market today, the more knowledge you have the better off you are. There a big problems in the mortgage and real estate markets right now. Better prepared loan officers can take these problems and create a huge opportunity for the future.

H. R. 6694 was passed out of the Financial Services Committee yesterday with strong support from both parties. The bill will probably be voted on by the entire House of Representatives soon. However, this is just the very first step in a long journey before the Bill is finally passed and there is not much time left before the October deadline when H. R. 3221 takes effect and seller assisted down payment programs are banned.

On Sept. 16, 2008 HR 6694 is being considered by the House Financial Services Committee. The Committee should be encouraged to pass the bill out of committee to be voted on by the entire House of Representatives.

Today, several lobbying groups representing rental property owners have issued declarations in opposition to HR 6694, the bill which would reinstate the use of seller assisted down payment programs with FHA mortgages.

Of course rental property owners would love to see the opportunity to own a home taken away from potential home buyers who can prove the ability to pay but are unable to save for a down payment. To justify their opposition, these organizations use the same flawed and faulty data used by HUD which has already been dismissed as inaccurate by the courts when it has been challenged.

U.S. housing markets are already almost down for the count, yet government officials are taking no action to protect the interests of the average citizen. Officials have been putting all their efforts into enacting programs to protect wealthy mortgage banking firms and real estate investors while giving lip service to the troubles of average citizens.

HUD data is extremely unreliable. Data from the lenders actually originating the loans shows that stricter underwriting and fraud control would essentially eliminate the gap in foreclosure rates between borrowers using down payment assistance and those making nearly meaningless 3% down payments.

Every effort should be made to save these valuable down payment assistance programs.

For more information on FHA training for loan officers, and to find out what you can do to help save these programs, visit FHA Loan Advice

Most people in the mortgage business run around talking about "Fed rate cuts" and Federal Reserve Meetings and what the Fed is going to do about interest rates. Yet most people don't have a clue how the Federal Reserve works behind the scenes, or what its true goals are. Here is a link to an hour plus presentation given by G. Edward Griffin back in 1998. Mr. Griffin is the author of THE CREATURE FROM JEKYLL ISLAND - A Second Look at the Federal Reserve, a history and analysis of the Federal Reserve.

In this presentation, Mr. Griffin explains the inner workings of the Federal Reserve in layman's terms that anyone can understand. It's a long presentation, but extremely well worth the time it takes to listen to it. Once you have listened to it, you will understand today's mortgage/credit crisis as you never have before.

Here's the link to the presentation:

http://24hourmortgageinfo.com/federal-reserve/what-is-the-federal-reserve-anyway-and-why-should-i-care

The Housing and Economic Recovery Act of 2008 goes into effect on October 1, 2008. As part of this Act, Congress placed a one year moratorium on risk based mortgage insurance premiums on FHA loans.

Under the risk based premium structure that HUD put into effect on July 14, 2008, borrowers with better credit and lower loan to value mortgages are able to pay lower rates while riskier loans carry higher insurance rates. A perfectly sensible system that FHA statistics show may actually be a major benefit to lower income borrowers since this members of this group with FHA loans have been shown to have higher credit scores on FHA loans.

As part of what may be a little bit of political gamesmanship on the part of HUD, HUD has just announced a new mortgage insurance premium structure to take effect on October 1, 2008.

Find out the details of the new FHA mortgage insurance premiums here:

http://fhaloanadvice.com/fha-mortgage-insurance-premiums-going-up-for-most-borrowers/

For the FHA training necessary to keep up with ongoing FHA guideline changes, check out http://fhatrainingsource.com

There is a great conversation going on about a Friday, August 21, 2008 post over on the Blown Mortgage blog regarding seller funded down payment assistance programs. I encourage everyone to go and take a look at it before reading the rest of this column. The conversation is centered around a guest post by Josh Lewis entitled "RIP FHA Down Payment Assistance Programs, Not So Fast".

As I expected would occur on a blog which keeps a necessary sharp eye on the dirty underbelly of the mortgage business, most of the commenters disagree with Mr. Lewis' opinion that down payment assistance programs should be saved.

(Read the rest on my blog at FHA Loan Advice)

The waiver of the FHA anti-flipping rule only applies to lenders, their subsidiaries or their vendors who are selling the foreclosed homes to owner occupant buyers. For more information, see my blog post "FHA Guidelines: FHA Waives Anti-Flipping Rule".

Carl Pruitt

http://fhaloanadvice.com