FHA Loans Rumor Alerts - 3% seller concessions & FICO scores - Part 1 of 2

By
Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

 

Extremely Important as of January 20, 2010 – New changes have just been announced. Please read :

 

FHA Loans - Some rumors are now reality - Important information about FHA mortgage changes !!!

 

 

FHA Loans & FHA Mortgages - Rumors – Important Information

 

fha loans & fha mortgages

In the last several months, I am still hearing about some rumors about FHA loans that aren't true. They are basically of opinion and speculation. I wrote this blog back in the beginning of October of 2009. It will give you a good idea about what rumors that I am talking about.

FHA loans to 5% down? No seller concessions allowed? Rumors? - The government at its BEST again !!!!

 

What rumors am I still hearing?  The biggest one is that the FHA seller's concessions has gone from 6% to 3%. This is also known as seller's help. Yes, it was talked about in September and October. Someone in congress tried to get this to pass, but it never made it through.

 

 

 

flipping a coin

This part is extremely frustrating to me, especially when the majority of the time, I am reading this kind of information in a realtors blog post. And it's doubled that when I hear it from a loan officer. It's almost like people are just flipping a coin about this, not caring too much if the information is accurate, just hoping to make the phone ring. The reason I say this is because I am seeing and hearing more of these tactics from loan officers when it comes to credit scores. I will talk about this example in my part 2 segment in a few days.

What it comes down to is the FICO scores, aka Credit Scores. The standard score for many mortgage companies is 620 and there are some that have a cutoff of 640. Yes, there are a few that will go below 620, all the way down to either 539 or 580.But the problem here that many don't understand is that these types of loans with the under 620 score can't be sold to other investors on Wall Street. So these companies will now portfolio these loans. I will talk about this in greater length in Part 2.

On the other hand, when it comes to FHA loans, they don't have a credit score cutoff. Under FHA, you can actually have no credit scores with no credit. Yes, this is still allowed, but find a lender that will actually do this type of loan. Another part of what is called lender overlays. Lender overlays is basically the lender adding more rules and guidelines to the mandatory guides that are set by HUD/FHA and others such as Fannie Mae and Freddie Mac.  And under FHA's guidelines, you could still have under a 500 credit score, but you would need 10% or more down. This has not changed since I wrote about this update.

 

 

Summary : Overall, you just need to be very careful to where you get your updates from, no matter if it's from a trusted realtor or loan officer. The internet can be powerful,yet it can be damaging, depending on where you get your information from and from whom.  Just because one says that they are an expert, might just be good advertising to gain your trust. Or because they think they are an Expert. Keep in mind, an Expert is one that doesn't know it all, at least this is my opinion. Please read below for more on this topic.

To be or not to be an Expert, that is the question. So, the question is, who has the answer.

And keep this in mind, what I talked about above is because some people are stating this information as fact now. Yes, HUD is still talking about some of these changes and so is Congress. And we could see some changes in less than a month. But to me, it's a rumor until it becomes a true hard fact that would be reality.

 

 

FHA Loans Rumor Alerts - 3% seller concessions & FICO scores - Part 1 of 2

FHA Loans Rumor Alerts - You don't need 10% or 20% down & more about credit scores - Part 2 of 2

 

 

 

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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- FHA Loans - USDA Loans - VA Loans -

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- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

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Mortgage Myth Busters

 

______________________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Harry F. D'Elia 01/19/2010 09:13 PM
  2. John Pusa 01/22/2010 04:07 AM
  3. Monique Combs 01/24/2010 11:52 AM
  4. Leander McClain 01/27/2010 03:59 AM
Topic:
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Location:
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Tags:
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Rainmaker
97,246
Brian & Marie Spray
www.DFWAreaRealtors.com - Action Realty Group - Frisco, TX
Frisco TX Realtors

Rumors are a powerful thing!  I bump into people nearly every day that that ask me things that always seem to start with "My neighbor told me (insert rumor here)"  At least they ask me about it so I have the opportunity to set the record straight!

 

 

Jan 19, 2010 08:39 AM #16
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

KYLE... . you hit the nail on the head. Yes, there is some truth to this, that HUD has even said there will be changes in the near future.  But, the reality of it is, for now, it's not a fact. It's all talk and assumption. And I will be talking about this in my part 2 and in an update later this week.  All I wanted to do here was to say that it's a rumor now, not a fact.  thanks

MELISSA.... . isn't that the truth.. or is that a rumor?  Wait, or is that fact... lol  Thanks for your input

ALLISON.... . thanks for the kind words of wisdom... to me, even though this is still being talked about, and they might come out with a new guideline soon, this is still a rumor. It's not a hard fact, hence why I felt I needed to write about this.. thanks

BRIAN & MARIE.... . you have to love that one. I have one better, which I will be explaining in my part 2 blog. I have talked to a few potential borrowers lately that have said their loan officer told them that it was a FHA guideline. And for the most part, it wasn't. It was that lender and or investor that had investor overlays, tightening up on the FHA guideline. But the loan officer doesn't make this clear and just blames it on FHA>.. sad and lazy...  thanks

 

Jan 19, 2010 09:55 AM #17
Rainer
63,430
James Lyon
Vista Pacific Realty - Sacramento, CA

Great and straight FHA information, thanks for the post.

Jan 19, 2010 09:59 AM #18
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Jeff, well-deserved feature here!  I get nuts when some congressman introduces a bill or a regulatory agency issues a rulemaking proposal, and it shows up like the new law of the land. 

Jan 19, 2010 11:42 AM #19
Rainmaker
365,638
Mike Russell
Mike Russell & Associates - Overland Park, KS
Overland Park Kansas Real Estate

Curtis Hall who helped create the ABR designation always said "Don't be the source, be the source of the source"

If you are going to make a statement, you better know your source. According to blank the FHA is going to blank.

Jan 19, 2010 12:17 PM #20
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Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Jeff: Thanks for the update. I just read on yahoofinance.com that FHA decided not to touch the 3.5% down amount but is going to raise the upfront MIP to 2.25%. Also, minimum credit score will now be 580 although we couldn't do loans below 620. Take care.

Jan 19, 2010 12:58 PM #21
Rainer
34,473
Michael Gordon - Colorado Springs Mortgage Lender
Peoples Mortgage Corporation - Colorado Springs, CO

Jeff..thanks for the informative post. If people would just take a few minutes a day to read industry news we would all be better served. Case in point, front page of the WSJ has an article regarding the state of the FHA and what MIGHT happen, not what has happened.

Jan 19, 2010 01:03 PM #22
Rainer
332,763
David O'Doherty
Raleigh Realty Inc - Clayton, NC
Clayton NC Homes, Raleigh, NC

Jeff, great info as always, thanks

Jan 19, 2010 01:10 PM #23
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Jeff,

It is good to know that you can read your information and know that what you read is what it is, and not a gossip, not a rumor, not a half truth. Because we can easily take the rumor for the true thing... and be wrong

Jan 19, 2010 01:10 PM #24
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Thanks for the info, Jeff. The chanegs are not necesarily going to help buyers. We already have issues becuase so many condos do not qualify for FHA financing.

Jeff

Jan 19, 2010 02:51 PM #25
Anonymous
Markita Aldridge-Woods

If they kill FHA then they basically kill the market for for many first time  buyers. Can't wai to read Part 2

Jan 19, 2010 04:31 PM #26
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

JAMES.... . thank you very much for the compliment.

PATRICIA.... . first off, thanks... secondly, yea, that definitely drives me nuts also. But what drives me even more nuts is the fact that this is not fact yet... it's rumor, because the gov't has been talking about it... and so has FHA/HUD...   but it's not a guideline yet... which means to me that it's rumor or hear se... but not implied yet.  thanks

 

MICHAEL... . I understand your first part of the comment... but I have to be honest, you lost me on the end of the 2nd part. Here is what you said... "If you are going to make a statement, you better know your source. According to blank the FHA is going to blank."

My question is, what does the underlined part me?  thanks

 

PAUL.... . I didn't check yahoo finance yet, but do u have a link to the article stating this?  In regards to the credit score part... well, I could see this... but again, as you stated, it wouldn't matter.  Investors on Wall Street aren't buying those types of credit scores anyhow... which I will talk about in part 2.  thanks and thanks for the good feedback.

MICHAEL.... . I will agree and disagree with you...  because not all industry related news is correct or true. Hence why I partially wrote this blog. As I mentioned, I have seen some people actually write about the 5% down and or that seller help has gone to 3% now... and that is not true.  So, if you believed everything you wrote, meaning that you read all industry related stuff, you would be getting some wrong information.  Just food for thought... In any case, thanks for the kind words.

DAVID..... . thank you very much for those kind words and for stopping by. thanks

JON... .  I truly appreciate those kind words... but I will be honest.. I am always fearful of what I write, because I am human and can make mistakes.  But because I preach so much in my blogs, or try to dig up information... and because things change so quickly... and that I do have many that look to me for this kind of information... I just would hate to let anyone down that one time...  hence the word Expert... an expert doesn't know all... that is a Clavin.. lol  Cliff, from Cheers...  Anyhow.. thanks for the comment.

JEFF.... .  well, I think those of us that have that kind of common sense should know that.  It's those in office that try and get the vote from others... or do the favors, or cursh things... just because it would benefit them, and not the average consumer. I kind of wrote about this and the mentality of the gov't and their greed in this post.  Are we living in an era of nuts and bolts? thanks

 

Jan 19, 2010 07:01 PM #27
Rainmaker
99,135
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Both Yahoo and CNN came out with similar articles yesterday, but again who knows where they are getting it from. I checked all sources FHA and nothing yet. When we get it from the horse's mouth, then we will know what the facts are.

Great post Jeff- a well deserving feature.

Gerry Suarez, Jr.

Your FHA Loan Pro!

Jan 19, 2010 11:41 PM #28
Anonymous
Jeff

I was looking for information on FHA but all I read is don't trust people I trust? oookkkay?

"Overall, you just need to be very careful to where you get your updates from, no matter if it's from a trusted realtor or loan officer. The internet can be powerful,yet it can be damaging, depending on where you get your information from and from whom.  Just because one says that they are an expert, might just be good advertising to gain your trust. Or because they think they are an Expert. Keep in mind, an Expert is one that doesn't know it all, at least this is my opinion."

wow.

What, as an FHA buyer, am I to do with this information?  I don't know?  I think I'm more confused now that I read this. 

Jan 20, 2010 05:14 AM #29
Rainer
37,946
Brandon Brittingham
www.easternshorehomesolutions.com - Salisbury, MD

Great post! I understand FHA looking at loans from a risk factor. I'm sure you may know this but alot of the general public doesn't know, is that Dave Stevens the new "head" of FHA was the former CEO of Long and Foster. He was well aware of how many FHA buyers are out there and how important they are to strength of the real estate market, I know they have to asses risk, but in some markets they are 50-80% of the buyers, this is going to make it harder on everyone.

I think the one rule FHA has come out with recently that may be a good thing is lifting the 90 "flip" rule for one year. Good info!!

Jan 20, 2010 06:36 AM #30
Rainmaker
1,080,029
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Jeff, thanks for posting this. It's like last year when the $15,000 tax credit was rumored and how many times did I see it in writing like it had been passed? Also appreciate the informatin about FHA loans, credit scores and lender overlays - love knowing that term. It makes more sense when you explain it like that.

Jan 20, 2010 12:42 PM #31
Anonymous
Olga Rubio

Jeff, thanks for the posting.  I hope they leave at least the 6% sellers concession other wise first time home buyers with little money won't be able to make it.

Jan 21, 2010 03:31 AM #32
Rainer
67,383
Dana Couch-Davis
Kendall Haney Realty Group - Memphis, TN
CRS, GRI, ABR, SRES

It will be very interesting to see where this heads.  Right now the new rules are being published in the Federal Register for the mandatory "comment" period.  Hopefully NAR and other consumer advocate organizations will chose to comment on these new rules.  It will be interesting after the comment period to see how Dave Stevens, the FHA Commissioner rules.  Having worked with Dave when he was a Sr. VP and then President of Long & Foster, I have found him to be a very thoughtful and considerate person looking at all sides of an issue before making a decision.  My hope is that he reamins that way during this time.

Jan 22, 2010 04:11 AM #33
Rainmaker
314,087
Monique Combs
Royal Shell Real Estate - Bonita Springs, FL
Royal Shell Real Estate - Monique Combs

Jeff ~ Awesone content. Sounds like FHA doesn't want to loan any money!

Jan 24, 2010 11:52 AM #34
Rainmaker
262,284
Christianne O'Malley
RE/MAX Realty Affiliates - Reno, NV
Exceptional Service - Delivering Results in Reno!

Hey Jeff - Did the allowable seller credit change from 6% to 3% earlier this year (like around May)? I thought it did but can't find anything on it. I figured you would know!

Sep 07, 2010 04:56 AM #35
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