www.lasvegasmtg.com Report: FHA Loans for Underwater Home Owners will be available to home owners that are current on their mortgages and their home is underwater starting September 7th, 2010. In Las Vegas, NV. that would be about everyone that bought before 2003. Interest in this new FHA program from underwater home owners has been keeping my phone off of the hook with home owners wanting more information on this new loan product.
Requirements to qualify for this new FHA Home Loan for Underwater Home Owners:
The existing loan can not be an FHA insured loan, it must be a conventional loan only. In Las Vegas, Conventional Home Loans were the standard loan used fro 2003 to 2008.
The Value of the property must be less then the current existing mortgage. Again this will not be a problem in Las Vegas.
The home owner must be current with their mortgage payment with no late payments for the last 12 months. With home owners being told by their lenders there is nothing they can do for them if they are current on their mortgage while trying to get a loan modification , will eliminate a lot of home owners for this program. The strategic defaulter will be unable to qualify for this new FHA Loan as well.
FICO score has to be greater then 500 to be able to qualify for this loan program. With Lenders requiring minimum of 620 FICO scores this will eliminate even more home owners as well.
The current 1st mortgage lender or investor must write off at least 10% off of the principal balance to qualify for the loan. The new Loan cannot be higher then 98.75% with UFMIP. This is a voluntary requirement from the existing lender to do the write down, but as an incentive to do this the Federal Government has set aside $14 Billion to entice lenders to co-operate. At this time it has not been disclosed how much the lender will receive from the government to accept the Short Refinance.
If the home owner has a 1st and 2nd then the 2nd mortgage lender will have to re-subordinate the loan and the Combine Loan to Value cannot exceed 115%. This would require the 2nd note holder to also write off a portion of their lien to keep under the 115% CLTV level.
There is a side note that borrowers must be aware of if they are successful in getting a Short Refinance from their lender it will have a negative impact on their Credit Scores. This will be caused from the existing lender reporting Paid in full for less then amount due to the credit bureaus. This could reduce FICO scores by 50 to 100 points.
Income qualification's are more stringent as well, with total housing expenses that cannot exceed 31%, and the total debt cannot exceed 50%.
There is a lot of interest presently from the public based on the calls I have been receiving. It was the same for HOPE, Making Homes Affordable, HAMP and everyone knows how successful a voluntary approach from lenders to co-operate has been. We can always hope!
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