ATTENTION LENDERS and REAL ESTATE AGENTS/BROKERS - YOUR COMMENT TO FHA IS DESPERATELY NEEDED - AGAIN!
Hey Realtors!!! This is a wake up call and a call to action for all of please. I am so glad I was able to ready this blog about FHA Closing costs and what is on the chopping block. Please take the time to scroll down and educate yourself. We need to speak up and make a difference!! Thank you Lenn for getting this to us.
ATTENTION LENDERS and REAL ESTATE AGENTS/BROKERS - YOUR COMMENT TO FHA IS DESPERATELY NEEDED - AGAIN!
FHA HAS ISSUED A REPORT OR ANALYSIS OF THE COMMENTS RE: LIMITING SELLER CONCESSIONS TO 3%.
FHA is again determined to limit seller concessions in FHA financed transactions to 3% of the purchase price (or $6,000) whichever is more. The sad thing is that they justify this move partly based on the false premise that VA limits seller concessions to 4%. FHA has considered previous comments under the 2010 proposal and has determined that higher seller concessions contribute to buyer defaults. This is based on an analysis of FHA loans made since 2009. I don't see anything in the analysis that accepts economic decline, unemployment, stagnating earnings, etc. as a contributing factor in FHA defaults.
SEE: FR–5572–N–01 Federal Housing Administration (FHA) Risk Management Initiatives: Revised Seller Concessions
Document ID: HUD-2010-0063-0908 Document Type: Proposed Rule A MISCONCEPTION BY FHA OF VA FINANCING. One of the statements in the FHA rationale for reducing seller closing help is their belief that VA financing limits seller contribution to buyer's closing costs to 4%. THIS IS A COMMON MISCONCEPTION held by many real estate agents, but the FHA should know better.
EXAMPLE OF CLOSING COSTS that can be charged to the VA borrower and paid by the seller are: Funding fee, appraisal fee, recording fees and taxes, credit report, pro-rated and pre-paid real estate taxes, hazard insurance, flood zone determination, title exam, MERS report, veteran represented attorney fee.
EXAMPLE OF SELLER CONCESSIONS that may also be paid on behalf of the seller UP TO 4% of the purchase price are: VA Finding Fee, prepayment of real estate taxes or insurance, gifts such as TV or Microwave (taken from the VA regs), extra points for interest rate buydowns, payoff of credit balances or judgments on behalf of VA buyer
IN PERTINENT PART, Cited in the FHA report:A. Changes to the July 15, 2010, Notice
In the July 15, 2010, notice, HUD proposed to cap the seller
concessions in FHA-insured, single-family mortgage transactions at 3
percent of the lesser of the sales price or appraised value, for the
purpose of calculating the maximum insured mortgage amount, reducing it
from the 6 percent limitation currently in place. As discussed in the
July 15, 2010, notice, conventional mortgage lenders have capped
allowances for seller concessions at 3 percent of the sales price on
loans with LTV ratios similar to FHA. Loans guaranteed by the
Department of Veterans Affairs have a cap on seller concessions of 4
percent of the sales price. In the July 15, 2010, notice, HUD also
provided statistical data illustrating a higher incidence of home loss
for borrowers who received seller concessions in excess of 3 percent.
The proposed cap was designed to align FHA's single-family mortgageTHIS IS WRONG, WRONG, WRONG. That 4% refers ONLY to "Seller Concessions" which can be paid by the seller on behalf of the VA borrower IN ADDITION to the buyer's closing costs which can ALL be paid by the seller.
YOUR COMMENTS ARE NEEDED: SEE: http://www.regulations.gov/#!documentDetail;D=HUD-2010-0063-0908
LENN'S COMMENT SENT TO FHA
The FHA reference to Veteran Administration "concessions" is incorrect.
The VA permits "seller concessions" of up to 4% of the purchase price of the property financed with a VA loan. However, "concessions" DO NOT include normal and customary closing costs.
The seller can pay ALL of the VA borrower's "closing costs" and up to 4% additional in "concessions".If FHA is using the VA example, the FHA SELLER would be able to pay ALL actual closing costs and an additional 4% Seller Concessions.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
_______________________________________________________________________________________________________
Want to learn more about Loudoun County, VA? Join Loudoun County, VA on Facebook!
Comments(5)