This is the latest information that Metro Arizona Mortgage is reporting from the NAR:
I. FHA Seller Funded Down payment Assistance Programs
The Judge has ruled in favor of the down payment assistance providers in their Court case involving the HUD's final rule that would have prohibited seller participation in these programs. (In addition, AmeriDream has a copy of the Judge's opinion on its website.)
Accordingly, unless the FHA Modernization bill is enacted with the provision precluding seller participation in these programs or the IRS takes action against an individual organization ,it appears seller funded down payment assistance programs remain operational for the foreseeable future.
II. FHA & GSE mortgage limits
FHA has indicated that they will be publishing the new mortgage limits this week. By law, HUD is required to publish new limits by March 14th.
We understand that the GSEs will also be ready to implement the changes immediately. In addition to the areas that will have higher loan amounts, the key question will be whether additional underwriting requirements will be required for these loans. We understand that Fannie Mae and Freddie Mac may place significant loan-to-value caps on these loans. FHA is considering requiring two appraisals.
III. Fannie Mae & Freddie Mac Appraiser Selection Policy
The New York Attorney General reached agreement yesterday w/ Fannie Mae and Freddie Mac to change appraiser selection criteria. Attached is the Home Valuation Code of Conduct. This policy could have significant ramifications in several areas.
Specifically, starting in January 2009, lenders will no longer be allowed to use staff appraisers or appraisers who work in firms owned by the lender. However, there appears to be an exception for lenders that own 20% or less of the appraisal firm. There is also provision that prohibits the appraisal entity from being owned by a settlement services company. Accordingly, the appraisal company appears to have to be an independent entity.
Mortgage brokers will also no longer be able to select appraisers. An important question outstanding is what is the definition of lender. If the RESPA definition of lender is used (close in the lender's name w/ its own funds), mortgage bankers that do not sell directly to the GSEs would not be affected. However, if the definition of lender applies to the lender that sells the loan to the GSEs, it would appear this provision applies to many mortgage bankers in addition to mortgage brokers.
Below is language from the agreement.
"Fannie Mae (or Freddie Mac) will immediately announce the adoption of the requirements contained in the Code, make appropriate changes to its Guide and, beginning January 1, 2009, will require that lenders represent and warrant that appraisals conducted in connection with single-family mortgage loans, other than government-insured loans, originated on or after January 1, 2009 that are delivered to Fannie Mae (or Freddie Mac) conform to the Code."
This change applies to loans sold to Fannie Mae and Freddie Mac and does not affect government loans.
IV. FHASecure
FHA is expected to announce changes to expand borrower eligibility criteria for FHASecure this week.
V. RESPA
We expect the proposed RESPA rule to be published soon possibly this week.
VI. FHA Modernization Bill
We continue to hear that the Senate and House are close to an agreement on the FHA bill. We understand the Congress is hopeful of passing the final bill by mid-March.
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