PMI Changes Making FHA and VA Much More Go To Loan Products.

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

MI Companies are notorious these days for making changes without any advance notification.  The latest change that we are seeing is that MI Companies have lowered the back end ratio, especially on loans with a 95 LTV to 41%.  Also if the area happens to be one that is being classified as a declining area, the lowest LTV that they will issue MI on is 90%.

I don't know if EVERY MI Company has made this change, but the four major ones that issue MI here in Connecticut have adopted these changes.  These latest changes further make FHA and VA Insured Loans much more attractive loan products than they have ever been before, especially where First Time Homebuyers are concerned.

There will probably be more changes, given the recent losses that MI companies have been hit with.  These days we can not presume that MI will be issued on any loan, and Lenders are being far more careful in Committing Loans before they have received verification that they will be able to obtain MI on loans with less than 80 LTV.

Realtors that have turned their nose up on FHA & VA Loans in the past need to reconsider their position about these loan products, before they advice their Sellers to hold out for a Buyer that is using a Fannie Mae or Freddie Mac Loan Product.  These days Buyers that submit offers and are using Fannie Mae or Freddie Mac backed loans are a much higher risk than FHA or VA Borrowers if they do not have 20% to put down.

 

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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Rainmaker
592,134
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

George,

Thanks for the information.

It's strange the same government that tells us high LTV's now has three agencies offering the highest loans.

Bill

Apr 27, 2009 01:42 PM #1
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Bill there is more to come.

Apr 27, 2009 01:43 PM #2
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Celeste "SALLY" Cheeseman
Century 21 Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

Oh...the best ones are FHA and VA...always have been...for one the strict guidelines show serious buyers...woohoo...and for another...like you said...the others have a high risk w/20% down even.

Apr 27, 2009 01:52 PM #3
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Sally it is tough to come up with 20% these days, especially for First Time Homebuyers.  MI Companies have been hit with a lot of loses lately and are willing to take risks right now.  FHA and VA have always been main loan products for me, so this does not affect me all that much, but I know some Loan Officers that this is having a big impact on.

Apr 27, 2009 02:29 PM #4
Rainmaker
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Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

George -- thanks for this update.  It is becoming more and more difficult for those who may want an conventional loan.  Most of the buyers I work with go FHA.  The problem with VA is that they have not caught up with FHA when it comes to the buyer being able to pay part of the buyer agent commission.  In our neck of the woods, often the co-broke fee is not split equally, is deeply discounted, or may be an entry only flat fee.  I have had a couple of clients try to talk to with VA, but it is difficult to get to the right person(s). 

Apr 27, 2009 02:37 PM #5
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joan, I have not seen that around here so that is new to me, thanks for filling me in.

Apr 27, 2009 02:44 PM #6
Rainmaker
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Ann Hayden
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com

George,

First time buyers should use FHA or VA if they are able.  Both are good for the borrower...

Ann

Apr 27, 2009 03:57 PM #7
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Ann I agree, but I still run into Realtors that are advising there Sellers not to take FHA & VA offers, and to wait until they get a Conventional offer.

Apr 28, 2009 12:17 AM #8
Rainmaker
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Esko Kiuru
Bethesda, MD

George,

PMIs have had a rough time out there and are really careful now where they do business. They are keeping a keen eye on Vegas, among other declining market, and constantly tweaking what they will do here.

 

Apr 28, 2009 10:36 AM #9
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Esko the big problem that we are having here with MI Companies is with them making changes and not notifying Lenders of the change.  This has made Conventional Loans with less than 20% down a real guessing game.

Apr 28, 2009 10:43 AM #10
Rainmaker
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Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

George.. Like others have mentioned thanks for the update.  I'm glad to see that FHA is still good for the first time homebuyers.  My question is, how can the MI companies NOT inform the lenders?  You said there is MORE to come... what else?

valerie osterhoudt

Apr 28, 2009 01:12 PM #11
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Valerie, they just do.  We did not get any prior notification on them not issuing MI on Back End Ratios over 41 on 95 LTV.  The first we heard of it was when we went to get it on a loan.  It is like they are making up the rules as they go along.  That is why I said stay tune for more.

Apr 28, 2009 01:49 PM #12
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Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

George you are so right more Realtors are now embracing these loans and some of the chances m really made these products more attractive.

Apr 28, 2009 04:20 PM #13
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Jennifer there are still a few that are being foolish and still resisting them.

Apr 29, 2009 01:47 AM #14
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