This news has been a long time coming, I just got the below from USDA. It looks like GUS (Guaranteed Underwriting System, which USDA & lenders utilize to run automated underwriting on mortgage applications) will be updated in mid-September and USDA will remove the "subject to" verbiage, which should motivate all remaining lenders who have been holding out on USDA to resume making new USDA loans.

 

Many of you may be aware of recent legislation in which Congress provided USDA with authority to resume operating the Single Family Housing GuaranteedLoan Program (SFHGLP) at no cost to taxpayers. This was done through a combination of authority to: increase the upfront fee up to 3.5 percent of the principal obligation; charge a new annual fee of up to 0.5 percent of the outstanding principal balance; and waive payment of any fees for low and very low income borrowers up to a certain amount of loan guarantees.

Rural Development expects to complete an interim enhancement to its electronic systems by mid-September to accommodate the increase in the up-front fee to 3.5 percent. When this interim enhancement is complete, Rural Development will process all Conditional Commitments issued after May 26, 2010, that had the proviso "subject to the availability of funds." These Conditional Commitments will be processed in the date order by which they were received by the agency. Also, after the enhancements are completed, Rural Development will resume issuing standard commitments without the special "subject to" condition.

In the meantime, Rural Development will continue to accept complete loan applications and issue Conditional Commitments subject to the condition in italics below. Lenders may close loans upon receipt of these conditional commitments, but will assume all risk until the Loan Note Guarantee is issued.

 

We are currently doing USDA mortgages even without needing USDA to update GUS, so for those who are in need of USDA mortgages prior to the mid-September update please feel free to contact me at shane@thebesthomeloans.com or at www.thebesthomeloans.com

 

Shane Milne

Loan Officer

949-273-4161 direct office

The former policy was that 5 years was acceptable if certain requirements were met (down payment, occupancy), however today Fannie Mae announced that someone with a prior foreclosure will need to wait 7 years in order to obtain new financing with a Fannie Mae conventional/conforming mortgage.  The exception is if someone had extenuating circumstances that can be documented, then just a 3 year waiting period is required.  This does not apply to FHA or VA loans where the Fannie Mae underwriting system is being utilized, it only applies to Fannie Mae conventional/conforming loan programs.  Conforming loan programs have more stringent requirements than FHA, VA, etc.

Full details on Fannie Mae's announcement can be found at Fannie Mae Announcement SEL-2010-08

Rep for one of our banks came out and said that they have received notice from Rural Development that they still have around $3 billion left of their allocation and it appears that their volume did not meet their projections, so USDA Guaranteed Rural Development funds might even be available going into May.

On Wednesday a couple bills were introduced to help extend the USDA GRH program. http://www.foxbusiness.com/story/markets/industries/finance/bills-introduced-extend-usda-zero-home-loans/

Oil and Water

Written By: Bonnie Wilt-Hild

Senior DE Underwriter & NAMP Instructor

Oil and water, two things that we all know do not mix well due to incompatible molecular structures, have become the poster child for underwriting with AUS. That’s correct, Oil (AUS) and water (manual underwriting). “How so”, you ask and the answer is a very simple one. We are still required to utilize automated underwriting on all cases that we underwrite. However, the findings don’t mean a thing where documentation waivers or loan approval is concerned. 

 

http://www.mortgageprocessor.org/mortgage-loan-processor/2010/03/oil-and-water.html

 

Great article written by someone who underwrites FHA loans every day.  Really gives insight on the process underwriters use today when approving mortgage applications (assuming that all minimum requirements from the printed guidelines have been met).  The automated underwriting approval that your loan officer initially receives after inputting your application information no longer holds water as it did before, careful scrutiny to make sure the borrower is credit worthy is being done on all applications.  Think manual underwriting with a bit of automated underwriting added in, and guidelines are tightening up monthly.

Just announced that FHA will permit the $8,000 tax credit, via a "bridge loan", to be used towards the down payment.

This is done by an approved nonprofit or governmental agency who typically will give the loan on the condition of being provided certain documents at closing (Final HUD namely), and will require that the credit be filed for that day.  The loan is recorded in 2nd position on title, typically interest free, and is released when it is repaid. Missouri started this before FHA made this announcement, and they require theirs to be repaid by June 2010.  Washington, Colorado, Idaho, Ohio, New Jersey, Delaware, Tennessee, Pennsylvania and New Mexico soon followed in participation.  I'm sure many more state, local and likely federal agencies will get involved.

Full FHA guidance can be found in their mortgagee letter 9-15 found at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-15ml.doc

 

Shane Milne

Loan Officer

949-273-4161 direct office

www.thebesthomeloans.com

I've found there is a lot of confusion when using online mortgage calculators to try and estimate payments when buying a home.  Most calculators just give principal & interest, and there is good reason, but it's nice to have the big picture when trying to estimate payments - as these days it is more common to have an escrow account where property taxes/homeowners insurance is paid along with the principal & interest portion of the mortgage payment.  Plus even if you don't pay those items along with your mortgage payment you'll see want to be aware of their costs.

The makeup of a mortgage payment can consist of:  principal & interest on the loan, property taxes, homeowners insurance, mortgage insurance, and flood insurance.  Other items to be aware of are any homeowners association (HOA) fees that your specific neighborhood, community or city might have.  The reason for the underlined letters is that is what generally makes up the mortgage payment - PITI, the other items aren't always charged (on condos homeowners insurance isn't required either).

Principal & interest is easy to calculate as like I said, all online mortgage calculators can calculate that as you just input a loan amount, interest rate, and loan term (15 years, 30 years, etc.).

Property taxes are a little trickier.  Most think that you just take the current property taxes but that can be misleading.  What the current property taxes are is what the current owner is paying, not necessarily what you will be paying, they could be but not always.  To get a real good idea of what your property taxes will be after you purchase the home call the county's assessor and ask if anything triggers a re-assessment of a properties value, if re-assessments are done on a set schedule, etc. and all other types of questions you'd like to know about how they determine a properties assessed value.  Values can be assessed in various ways but the most common that I've seen is when it's based on the new sales price (where a % of the sales price, or a formula based on the sales price, determines what the new amount of property taxes are), is on a set schedule to assess (such as every 12 months, 2 years, etc.), or when an additional impovement has been placed on the property (such as when a home is put up, or a casita addition out back in the yard, etc.).  If taxes are re-assessed on a set schedule in a lot of cases it is not based on the new sales price, just based on the general direction of home values.  Whatever the case is, you now know when, what triggers a re-assessment, and what the assessed value would like be.  But that doesn't answer what the property taxes are, just the assessed value.  So next you need to contact the county treasurer's office or in some cases it's actually just called the tax collector, these are the people that collect the property taxes from you.  In less populated areas this could also be the same as the assessor's office.  You'd supply the tax collector people with the assessed value you determined by using the information the assessor gave you, an address you have in mind or perhaps just a street name, zip code or school district, and ask what the formula would be to determine how much the property taxes are.  It can be simple or have multiple steps and involve some algebra, either way it's important to know so you can properly budget for your new home.  I'd also ask if the formula is different for other areas, as it often is.  Here in California property taxes are re-assessed when a home is sold or transferred, they take the new sales price or value minus a $7,000 homeowners exemption (if owner occupied), multiplied typically by 1%, and that equals the base amount of property taxes, and then any special assessments/mello-roos is added on top of that (usually flat $ amounts).  

Homeowners insurance isn't as involved to determine.  The best way to determine what you could be paying for homeowners insurance is simply by calling up a homeowners insurance agent and inquire about quotes.  Depending on the square footage of the home, sales price/value, proximity to a fire hydrant, type of roof, if it has an alarm system or not, amongst other items determines the annual premium - but you can always be as general or specific as you'd like when you ask for the quote.  When you talk to the insurance agent you can also find out if any other special type of insurance is generally required or taken in your area, such as flood insurance if you are in a low lying area (some of the central plains states, Florida and parts of Louisiana), or hurricane insurance (Gulf Coast areas), or earthquake insurance (if you live along/near a fault line).  I've seen insurance policies as cheap as a few hundred bucks all the way up to several thousands (and that was just a normal sized home in Florida).

Mortgage insurance is another item that may be included in your mortgage payment.  Mortgage insurance is becoming more common as the use of FHA, and the reduction of the % of your home's value a 2nd mortgage can go up to (called the "loan to value" or LTV), have developed.  When you have 20% down (or can get the 1st mortgages LTV to 80% or below) with conventional financing mortgage insurance is not required - however when the 1st mortgages LTV exceeds 80% then an extra insurance policy is needed to protect the lender in the event you default on your mortgage, that is private mortgage insurance (PMI).  FHA requires mortgage insurance (MI) too, but is waived after you've paid it for at least 5 years and until your LTV gets to 78% of the original value, or you take a 15-year mortgage term or less and have 10% equity/down payment.  Since conventional financing relies on the use of 3rd party insurers, it's called PMI, FHA is self insured by HUD, and therefore is just MI.  When talking about it in general though either is common to use.  The amount of MI is based upon your loan amount, it's either .55% or .5% per year, divided over your 12 monthly payments each year.  PMI is also based on your loan amount, as well as FICO score, loan program type, property type, occupancy type, LTV, purpose, etc.  PMI can also come in various forms rather than the straight additional amount added to the other portions of the mortgage paymet, you can take a slightly higher rate in trade for not paying the monthly amount, pay an upfront lump sum to buy it out, and other options depending on what the mortgage lender has set up with it's PMI vendors  VA & USDA loans do not have monthly MI.

Lastly, in some areas (newer areas) you might have homeowners association (HOA) fees.  The development you are buying in could have HOA fees to keep up it's common areas, the landscaping in your own yard, the electric gate that leads to your neighborhood.  Then that development could be part of a community/city which could have more common elements such as a clubhouse, a pool/splash park, trails, skate park, etc.   HOA fees on a condo will be more than they would be on a house, if any at all.  This is because on a condo the HOA fee usually includes a homeowners insurance policy that covers the dwelling (not personal or liability coverage though).  So if the condo burns down it could be rebuilt, but all of your items inside would not be replaced or value reimbursed to you, and the neighbor who trips over your garden hose and busts his teeth while escaping the fire would not be covered either.  Because of that you should also look into getting an additional condo policy for those extra coverage areas, usually runs just a few hundred a year.

Ginnie Mae has put out a mortgage calculator that compares FHA, VA & Conventional payments given a sales price, interest rate and any funds for down payment you may have.  You can edit/add/remove property taxes, insurance, HOA fees and even a space for utilities & maintenace costs.  Once you gather the above information, and know what interest rates you could expect to qualify for, you can accurately estimate your payments on your own.  You should find that the P&I portion of the payment is not the same amongst FHA, VA & Conventional given the same loan amount/interest rate... this is because on FHA & VA loans there is an additional upfront cost not found on conventional loans (FHA has an upfront mortgage insurance premium, UFMIP, and VA has a funding fee usually).

 

Ginnie Mae mortgage calculator: http://www.ginniemae.gov/2_prequal/le_intro_questions.asp?section=ypth

Example of my county treasurer's website where you can get current tax rates, tax amounts, and estimate taxes (saves a call to the treasurer): http://tax.ocgov.com/tcweb/search_page.asp

One PMI provider's PMI rate/amount calculator (most user friendly one I've found): http://www.mgic.com/is/html/ratefinder.html

FHA current MI rates/guidelines: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-22ml.doc

 

 

Shane Milne

Loan Officer

949-273-4161 phone

www.thebesthomeloans.com

I just got an email from the South Carolina USDA office stating the below - at least the delay isn't due to lack of funds, etc. and is just because HUD is taking a little longer to come out with their 2009 income limits:

 

A notice will be published in the Federal Register this week changing the effective date for the consolidated income bands from March 20 to April 20, 2009.

The reason for the change is that the USDA Rural Development receives the basis for its income limits from the Department of Housing and Urban Development (HUD) and HUD has not published their 2009 income limits as early as they usually do.

Once Rural Development receives HUD's income limits, Rural Development must make a number of adjustments. After the adjustments are made, the Information Technology staff must make changes to our automation tools, for example, our eligibility website (link below) and our Guaranteed Underwriting System (GUS). Making those changes includes testing them to make sure they work properly.

www.rurdev.usda.gov/rhs

www.rurdev.usda.gov/rhs/sfh/GSFH_Information/GSFH_Specific.htm

 

 

Shane Milne

Loan Officer

949-273-4161 phone

www.thebesthomeloans.com

You might have been reading a lot of lenders limiting cash out on FHA loans to 85% LTV, or maybe have heard rumors about FHA limiting cash out to 85% LTV... well the end of March will be the last day you can order FHA case #'s and still be able to do cash out over 85% LTV.  See snippet from mortgagee letter below:

 

"Effective for case number assignments on or after April 1, 2009, the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85 percent of the appraiser's estimate of value. 

Given the continued deterioration in the housing market, and FHA's need to limit its exposure to undue risk, this reduction to the maximum LTV for cash-out refinances is being instituted on a temporary basis while FHA further analyzes the housing and mortgage industry as well as its own portfolio to determine whether permanent measures should be taken. "

 

 

Shane Milne

Loan Officer

949-273-4161 phone

www.thebesthomeloans.com

Mortagee Letter 2009-07 (link to a .doc file)

February 24, 2009
MORTGAGEE LETTER 2009-07


TO:        ALL APPROVED MORTGAGEES
       
SUBJECT:    Loan Limit Increases for FHA

This Mortgagee Letter provides information on Federal Housing Administration (FHA) single family loan limits that have changed as a result of the American Recovery and Reinvestment Act of 2009 (ARRA) signed into law on February 17, 2009.  These limits are effective for those loans for which credit is approved in calendar year (CY) 2009 and will remain in effect until December 31, 2009. 

FHA Single Family Programs Affected:

The loan limits described in this Mortgagee Letter are effective for those mortgages insured under the following Sections of the National Housing Act: 203(b)(FHA's basic 1-4 family mortgage insurance program - including individual condominium units), 203(h)(mortgages for disaster victims), and 203(k)(rehabilitation mortgage insurance). 

FHA loan limits for Section 255, Home Equity Conversion Mortgages (HECM) are effective immediately for those loans closed on or after the date of this mortgagee letter. Further instructions for HECM loan limits are set forth below. 

Revisions to Current Limits:

Under ARRA, the revised FHA loan limits for 2009 will be set at the higher of the loan limits established for 2008 under the Economic Stimulus Act of 2008 (ESA) or those established for 2009 under the Housing and Economic Recovery Act of 2008 (HERA).  

2009 HERA vs. 2008 ESA Limits:

Under ESA, loan limits for high-cost areas were set at 125 percent of local house price medians, with a maximum high-cost limit (the national ceiling) of 175 percent of the national conforming limit ($729,750 in the continental U.S.).  See Mortgagee Letter 2008-06, dated March 6, 2008. 

HERA, on the other hand, stipulated that the national conforming loan limit remain at $417,000 for 2009, and that in future years, it shall be pegged to a house-price index chosen by the Federal Housing Finance Agency.  HERA also provided that the one-unit mortgage limit for any given area shall be set at 115 percent of the median house price in that area, except that the FHA mortgage limit in any given area could not exceed 150 percent of the Freddie Mac national conforming loan limit ($417,000 in 2009), nor be lower than 65 percent of that limit.  See Mortgagee Letter 2008-36, dated November 7, 2008.   FHA's floor and ceiling loan limits for 2009 under ARRA, which relies on the higher of HERA or ESA, are set forth below. 

FHA Floor:

Under both HERA and ESA, and thus under ARRA as well, the FHA national floor limits remain set at the 65 percent amount (the "floor,") by property size, as follows:
One-Unit    $271,050
Two-Unit    $347,000
Three-Unit   $419,400
Four-Unit    $521,250

 "High-Cost" Local Limits:

Any area where the limits exceed the floor is known as a "high cost" area.  Because ESA used a higher multiple in establishing the national FHA loan limit ceiling, as a percentage of the conforming loan limit, than does HERA (175 percent versus 150 percent), the ESA national ceiling is binding under ARRA for 2009.  By property size, these national "ceiling" limits are as follows:
One-Unit    $729,750
Two-Unit    $934,200
Three-Unit    $1,129,250
Four-Unit    $1,403,400

For areas where the higher of the ESA-determined loan limits for 2008 and the HERA-determined limits for 2009 is in between the national floor and the ceiling, the limit shall be at the higher of those two limits, effective for any loans for which credit is approved in CY 2009. 

The list of areas where the FHA mortgage limits are at the ceiling is provided in Attachment I.  The list of areas where the FHA mortgage limits are in between the ceiling and the floor is provided in Attachment II.  For any areas not listed in either Attachment I or II, the FHA mortgage limits are at the floor; this includes the vast majority of those areas (i.e., counties, parishes, boroughs, and independent cities) for which FHA has published loan limits.

Special Exceptions for Alaska, Hawaii, Guam, and Virgin Islands:

Loan limits for the special exception areas of Alaska (AK), Hawaii (HI), Guam (GU) and Virgin Islands (VI) also follow the ARRA rule of choosing the higher of the 2008 ESA and 2009 HERA limits.  The National Housing Act permits mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150 percent of the above national ceilings, by property size, to account for higher costs of construction.  Thus, these four areas have a potential higher ceiling in 2009 of $1,094,625 (1-unit), $1,401,300 (2-unit) $1,693,875 (3-unit); and $2,105,100 (4-unit).  At the present time, no counties in these areas qualify for limits above the national ceiling of $729,750. 

Home Equity Conversion Mortgages (aka a reverse mortgage):

Under ARRA, the national FHA loan limit for HECM will increase from $417,000 to $625,500 (from 100 percent to 150 percent of the conforming limit).  HECM loan mortgagors do not undergo the same procedures for credit approval as do mortgagors for forward mortgages.  FHA does not deem the credit approval process to be complete until the HECM loan is closed.  Therefore, HECM loans closed on or after the date of this Mortgagee Letter are subject to the higher maximum dollar amounts. 

    In those areas, the maximum claim payable by FHA is 150 percent of the Freddie Mac conforming limits.  To avoid potential cases where a claim could be less than the national limit, as adjusted for the special exception areas, HUD had decided not to make the adjustment.  Therefore, these few special exception areas will have the same $625,500 limit as all other areas.

FHA will, for a limited time, allow HECM loans that received case number assignments but did not close prior to the effective date of this mortgagee letter to be closed using either the old limit that was used to originally calculate the loan, or the new limits as prescribed herein.  An option will be made available in FHA Connection for the lender to choose which rate to use.  This option will be available until April 30, 2009.

Where to find comprehensive listing of FHA local limits:

Complete schedules of FHA mortgage limits for all areas, for forward loans and reverse mortgages, are available through the internet at https://entp.hud.gov/idapp/html/hicostlook.cfm.   The limits are determined by the county in which the property is located, except that for properties located in metropolitan or micropolitan statistical areas, as determined by the Office of Management and Budget, the limit for the entire area is set based on the county with the highest median price within the metropolitan or micropolitan area.  If you are unsure if a county is within one of the metropolitan or micropolitan areas listed on the attachments you should check the internet site before closing the mortgage at the revised limit.  For a complete list of all metropolitan counties in the country by MSA, view the most recent bulletin updating statistical areas of definitions and guidance at http://www.whitehouse.gov/omb/bulletins/index.html.

 

Shane Milne

Loan Officer

949-273-4161 phone

www.thebesthomeloans.com

Hello everyone

We are sending this to our California animal lovers and asking you all to read the following and then make a quick call to Sacramento.

It's no secret that California is in dire need of money, but the governor is proposing that pets be considered 'luxuries' and therefore a 9% to 10% tax should be levied on services rendered by vets. While most of us can afford such a tax, others will be pushed beyond their ability to pay, resulting in the abandonment of many pets.

Please protest this tax by calling Sacramento. The number is to an automated survey at the governor's office. The call is not free, but it It will take less than a minute and ill cost very little.

Dial: 916-445-2841

The numbers to press in response to the questions are: 1 - 5 - 1 - 2 (i.e., 1 = for English; 5 = to transfer to veterinary tax proposal; 1 = to choose to comment on the veterinary tax proposal; and 2 = to oppose the tax.

Take a moment and take action NOW.

Please tell your friends and ask them to do the same.

 

Shane Milne

Loan Officer

949-273-4161 phone

www.thebesthomeloans.com