Long Beach, Ca.    More good news on the loan origination front.  We are seeing both more production in regard to loan applications, since February, the estimated US fundings this year have increased by $400 billion dollars.  A lot of that is due to conventional refinancing.  In the first quarter, we are expected to fund $.43 trillion that’s up from $.294 trillion in the fourth quarter of 2008. 

Three Ways that FHA Underwriting is becoming tighter

Somethings to be aware about with FHA financing:   Pretty much FHA financing is the only game in town right now for home purchases because there are no more 100% financing sub-prime loans.  Understand that FHA is a full doc program that requires lenders to prove up that the borrowers are employed and have the funds to close.  Nevertheless, what we are seeing is the FHA loan program morphing into a quasi-conventional  type of product.  This is not good for the borrowers or the real estate agents.

1. More and more banks are requiring a minimum FICO score of 620 wherein in the past you could fund a loan with a 580 score or less.  The requirement has raised to  640 to 660 for jumbo FHA loans. 
2. In addition, as of today, many lenders are no longer are accepting alternative lines of credits from home buyers that don’t have three lines of credit established on their credit reports.
3. You are currently required two FHA appraisals instead of one if you are funding an FHA Jumbo loan, this could cost a home buyer $700-$1000 up front for appraisals vs. the old

      $350-$500 that we used to pay. 

We are hearing more information on the 105% refinance program from the agencies.  And it is not good if it is a Freddie Mac loan. The Wall Street Journal article reports that the new refinancing program doesn't allow borrowers to shop around for the lowest fees. “Brad German, a spokesman for the government-backed provider of funding for mortgages, said any borrower with a Freddie-backed loan who wants to refinance under the program needs to do so through the company that services his current loan. Borrowers with Fannie-backed loans will be able to seek refinancings under the program from more than 30,000 lenders nationwide. While Fannie is letting borrowers shop around, those deemed a higher risk are hit with fees that can total 3% or more of the loan balance, the WSJ reported. Freddie's maximum fee on these refinancings is 0.25%.

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office" and a Net Branch of GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing.  Contact him at:  562-989-4608 ext. 110

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