The other day, I overheard a loan officer at a homebuyer fair discussing the benefits of this great "new" FHA product. New ?! It's scary to think that this is a new product for many lenders out there. Anyway, FHA has been around for a long time and we have been doing FHA loans....for a long time. In fact, National City has consistently been one of the top 3 FHA/VA lenders in the nation and I personally have been doing them since the 80's. And yes, I'm that old! J
That being said, I wanted to share some pertinent info regarding some recent FHA changes. Over the past year, FHA has become the product of choice for many lenders. Many lenders are still learning how to use this product, and unfortunately don't always use the product correctly. Because of this, HUD is making some changes to their product to reduce some of their risk. Loan to values on cash out refinances are going to be reduced. Credit is going to tighten further. One thing however, that is important to know is how HUD will look at "retained properties". In other words, if a borrower currently owns a property and wants to make another purchase using FHA, they must be able to qualify for the new house payment along with their existing house payment. In other words, FHA will not allow the borrower to count rental income on their current property unless:
•· The homebuyer is relocating to an area not within reasonable commuting distance
•· The homebuyer has at least 25 equity in their existing home
This is a temporary measure (for now) to try to hold off the increasing numbers of "buy & bail" transactions. In short, a "Buy & Bail" is a transaction where the buyer closes on a new home and walks away from their existing property (allowing it to be foreclosed upon).
In case you didn't already know, starting this week, Clackamas County will only be open for recordings Monday through Thursdays, 7am-6pm. It is expected that Multnomah & Washington will follow suit.
As always, we are here to help in any way possible, so please email or call if you need anything.
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