More Mortgage Changes?

The mortgage industry is trying hard to find an identity to hold. Problem is, this is a ever changing market with influence in all different directions. We all need to be aware of changes and proposed changes that will affect future decisions. I want to discuss some of these changes so we can prepare. You may already be aware but as of Jan. 1st 2010 we started using a new Good Faith Estimate. This monster is just stupid and very confusing for customers. The government says they wanted to make the GFE easier to read and did just the opposite. For example, the new good faith does not itemize fees like the old GFE or a HUD-1. The new GFE does not include some important information like the old GFE. It does not give you a PITI (Principal, Interest, Taxes and Insurance) payment and does not mention the cash needed to close. In one hand, I like it because I do not have to explain every fee any longer the fees just do not show up anywhere but a total. One the other hand, closings will be a trick because that is when the itemized fees will show and there will surely be questions. The first week of January I just said "no big deal, I will give my customers the old GFE along with the new one the law requires." Wrong again, I was informed that HUD will not allow us to give out any form similar to the old GFE. I wanted to make sure my customer and realtors would see the itemized fees, PITI payment and the cash needed for closing but our government said I cannot show these items. This really does not make sense to me. The home buyer tax deductions for first time home buyers and non-first time home buyers is set to expire on April 30th. This is a change we all knew but now time is running thin. I wanted to remind everyone this date is getting close. Another date to make sure you are aware of is April 5th. On this day FHA will increase the up front mortgage insurance premium from 1.75% to 2.25%. This will raise payments and make qualifying just a little harder for some on the fence customers. The increase was needed to sure up the FHA insurance program against the current losses in the real estate market. Most everyone is aware of HVCC or Home Valuation Code of Conduct but did you know on February 15th all FHA and USDA loans will follow the HVCC guidelines? This will mean no matter what type of mortgage loan (Fannie, Freddie, FHA, VA, USDA, Reverse and Construction) no one will be allowed to pick a certain appraiser for any reason. This sounds on the surface like easy and a fair check and balance but dealing with the process for months now on conventional loans I will tell you it is a mess. As an example, all appraisals must be paid for by credit card. No checks at the door anymore. What if your customer does not have a credit card or does not have $425 in room on a credit card? No more lookups to see if the home would likely appraise. You either pay the full fee or don't. Other FHA proposed changes that currently do not have a date will include changing the maximum seller paid closing cost from 6% to 3%. This will force new home buyers to have that much more cash to close if the changes are approved. Another change being seriously looked at is raising the minimum down payment from 3.5% to 5% for high credit score borrowers. Those with credit scores below 660 will need up to 10% down payment for an FHA insured loan. Again these are proposed changes but will greatly impact a customers ability to purchase if acted upon. Wow, this is a rather long blog for me but there are dates and changes we all need to be prepared for coming up. We are still closing FHA loans with as little as 580 in credit score. Our USDA loans are still moving many people into new homes and Santa Rosa County has new SHIPP funds available. Please call me if you have any questions. Please send me some new customers so we can close before the changes.