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FHA Loans & FHA Mortgages -- Legislation Update -- August of 2008

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Real Estate Agent with The Address Realty BRE#01299346

 

Jeff Belonger is my resource on the Mortgage Industry's latest trending news. I rely on his opinion to forumulate educating my clients on the current state of lending on the National, State and Local Levels. It is with great respect I re-blog this post he wrote on the new FHA program--Jeanean Gendron

 

Original content by Jeff Belonger

FHA loans & FHA mortgagesAs many of you are aware, the mortgage industry has been going through some major changes in the last 6 months. Well, get ready for some more changes. In my honest opinion, many of the changes are for the worst. Sorry, but it's reality and we need to pay attention more than ever.

I am going to list the important changes next. I will list from the most important to least, but based on my opinion.

 

1.  Seller funded downpayment assistance programs - Know as DPA's or Downpayment assistance programs. Seller's can't participate as of October 1st, 2008, unless the borrower is approved prior to this. FHA confirmed the definition of "borrower approved" by stating that cases run through the FHA scorecard, eligibility will be determined by the date of the last scoring time. For manually underwritten loans, the eligibility will be determined by the date of the underwriter's signature on the MCAW or the loan transmittal form. ** Ask your loan officer for definitions in what was just mentioned. ** FYI - Even though the new bill was passed by Congress, Bill HR 3221, there is a new bill that will hit the floor soon to oppose the banning of DPA programs.

 

2.  Cash Investment from borrower - Not only do they kill the DPA program, which helps buyers to purchase a home with little or no money out of pocket, but HUD now raises the cash requirement. The previous requirement was 3% from the buyer and the new investment from the buyer is now raised to 3.5%. FHA should be publishing a mortgagee letter in the next 30 to 60 days and this should go into effect on January 1st, 2009. My opinion?  It's tough to save as it is. On a $200,000 property, the buyer will now need an additional $1,000. You will still be able to get 100% gifted to you by a relative and still be able to get 6% seller contributions.

 

3.  Risk base pricing - FHA is going back to the old method of upfront mortgage insurance premiums. The new changes were mentioned here : http://www.fhaloansfhamortgages.com/fha-mortgage-insurance-new-risk-based-pricing-guidelines-effective-07-14-08  So, FHA will be going back to the old method, which is just one calculation. This will go into affect with new FHA case numbers assigned on or after October 1st, 2008.

 

4.  Mortgage Limit Decrease - As many of us know, when the Stimulus package was approved and signed by the president, FHA loan limitswere increased, but only up until December 31st, 2008. The mortgage limits will be lowered in high cost areas to 11% of the area median sales price up to a maximum of $625,000. HUD is still trying to decide whether it is $417,000 across the board, $417,000 "floor" and higher limits in high cost areas or $625,000 across the board.

 

Overall, as you can see, there are some important changes in the mix. And in my opinion, this will hurt real estate more than help it. But nothing is confirmed until FHA publishes their mortgagee letters to reflect the changes.

For those that of you that want to help save the DPA program, Gerry Suarez wrote this post. http://activerain.com/blogsview/621419/we-have-one-more  Please read this and vote, let your government officials know how you feel. Voice your opinion.

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Jeanean Gendron - Specializing in Marketing and Selling Unique Properties--We love where we live and work and we love our listings. This is why we specialize in marketing and selling unqiue properties that have been developed to the highest and best use of the land.

 

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Visit our main real estate website that provides you with the ability to Search the MLS and to set up A FREE MLS ACCOUNT so that you can save searches and select favorite properties. See all Shasta County MLS Listings in real time. I also have many saved searches for unique properties (ranch, views, river, acreage).

 

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