|FHA Handbook 4000.1 - Part 2 of 3 - Changes in the Credit Review Process (Effective June 15, 2015)
This is not easily attainable information, so you can have a definitive advantage in your market over the competition. Part Two of our three-part series focuses on assets, credit, credit review and income changes. Note that the author has presented you with the “Current” FHA guideline followed by a column for the “New” FHA guideline. As discussed in the February 10, 2015 Mortgage Currentcy issue, this new manual will replace the former FHA underwriting manual for Single-Family Mortgages effective June 15, 2015 (FHA Handbook 4000.1 Info # 14-59 )
|FHA Handbook 4000.1 - Part 1 of 3 (Effective June 15, 2015) [Download the FHA Handbook 4000.1 - Single Family Housing Policy Handbook, Title II Insured Housing Programs Forward Mortgages, Origination through Post-Closing/Endorsement (effective June 15, 2015]
FHA New Underwriting Manual February 2015|
Starting June 15, 2015, there are big changes happening at FHA with regard to their underwriting manual. The new manual 4000.1 applies to case numbers issued on or before June 15, 2015 and will be a live document, continuously updated to make important changes easier to access. This article will be part of a 3-part series to introduce you to this new manual.
|FHA Reduction of FHA annual Mortgage Insurance Premium Rates and Temporary Case Cancellation Authority, ML-2015-01 & 2015-03) Effective January 15, 2015)
FHA Monthly Mortgage Insurance Premiums January 2015|
This article was released on January 9, 2015. The following day FHA issued additional information in INFO #15-03 regarding case number cancellation procedures. This additional information is below in red. FHA expects many cancelled case numbers on loans that have not closed and are in process. This mortgagee letter acquaints you with the procedures and dates for cancelling and resubmitting case numbers. Additionally, there is a process for bulk cancellation to expedite the process. This is important news to circulate to origination personnel. Sales will now have a renewed opportunity to refinance clients out of their old loan structure and into one that may be more favorable to the consumer.
|No More Flips! FHA Announces Expiration of the FHA Flipping Waiver, FHA Info $14-73 (Effective January 1, 2015)
No More Flips FHA Announces Expiration of the FHA Flipping Waiver December 2014|
Get the word out to your Realtor partners. This was an unexpected announcement from FHA and has a big impact on sales contract timing. In 2014 it could mean ‘hurry up and get the property under contract’. After January 1, FHA financing-dependent borrowers won’t be able to make offers on certain properties as soon as non-FHA financed buyers. You’ll find a link to the “original” flipping rules to refresh your memory.
|FHA Maximum Loan Limits, Mortgagee Letter 14-25 (Effective January 1, 2015)
FHA 2015 Loan Limits December 2014|
This Mortgagee Letter has two attachments. Attachment 1 is the list of areas where the limit is at the ceiling. Attachment 2 is the list of areas between the floor and the ceiling. Areas not listed on either attachment are at the floor. We don’t know if TOTAL Scorecard will be updated by January 1, 2015 with the new loan limits. Be very careful to double check loan amounts and loan limits to be sure you are in compliance during the transition period from 2014 to 2015 loan limits.
|FHA Revised Changes to the Home Equity Conversion Mortgage (HECM) Program Requirements, ML 2014-21, Various Effective Dates
This ML is 26 pages long. We have outlined the major updates for those LO’s who originate HECM loans. You’ll find various effective dates, depending on which “HECM POLICY DESCRIPTION” you are working on. However, the biggie is the new seasoning restrictions for paying off any non-HECM liens. Lenders are arguing that these new seasoning restrictions impose undue hardship on borrowers needing to pay off HELOCs.
|HUD's Qualified Mortgage Rule: Announcement of Intention to Adopt Changes Pertaining to Exempted Transaction List – FHA Info #14-65 (Effective 11-3-2014)
HUD will not adopt the CFPB’s points and fees cure provision. Instead, FHA-approved lenders may cure certain errors that occur in origination before submission for insurance endorsement. Read the 3 reasons why!
|The New FHA Handbook 4000.1. Info #14-59 FHA Completes First Section of Single Family Housing Handbook (Effective June 15, 2015)
It seems like every agency these days has been given the mandate to create new handbooks/reference guides – USDA, Fannie, and now FHA. We are sure FHA will “tweak” it prior to the June 15th effective date. You’ll probably want to read about the re-named “Simple Refinance” and how it’s been broken down into 3 categories.
|FHA Finally Ends the Practice of Post-Payment Interest Charges on Loan Payoffs – Final Rule, Federal Register Volume 79, No. 165, August 26, 2014 (Effective 1-21-15)
FHA Interest Payment September 2014|
This final rule changes that, but ONLY for mortgages closed on or after January 21, 2015, which means that most of your future client base won’t really benefit for many years to come and none of your current clients will see any cost savings.
|DU for Government Loans Release Notes for October 18, 2014
Remember that all of your files are subject to this new DU version, so your findings could look different before the weekend and after the weekend. I’d highly recommend running all of your pipeline loans through DU after the weekend of October 18 just to make sure everything is looking good. You never how the software tweaks will affect your file.
|FHA Extension of Temporary Approval Provisions for the Federal Housing Administration (FHA) Condominium Project Approval Process,
ML 2014-17 [Download Chart/Checklist, FHA Condo Approval Guideline Summary & Comparison Matrix]
FHA Temp Condo Approval September 2014|
It’s easy to forget that we are still under temporary condo approval guidelines that are a big stretch from the actual requirements set forth by FHA. As a reminder, we are reprinting the comparisons between the regular guidelines and the temporary approval guidelines we currently are allowed to use. Bottom line for now – nothing is changing until 2016.
|HECM: Special Instructions for Case Number Cancellation to Allow Borrowers to Choose New Policies – FHA INFO #14-43 (Effective 8-4-14)
It will be important that you document your current HECM pipeline files to reflect that you have informed your borrowers of their right to utilize these new policies to either remain with current policy or exercise their right to change. (Yes, I’m suggesting a form, and no, there isn’t a standard one provided by FHA.)
|FHA Home Equity Conversion Mortgage (HECM) Program - New Principal Limit Factors, June 27, 2014 Mortgagee Letter 14-12
FHA Home Equity Conversion Mortgage HECM Program New Principal Limit Factors July 2014|
HEMC Loans – you will need to document compliance with the requirements regarding cost vs benefit of the loan and borrower counseling, as well as provide the option to a borrower of using the new principal limit tables. Lenders will have to determine the best way to accomplish this, but may want to consider developing a form for borrowers to sign. (Great…more paperwork, I know, but this is a CYA issue I wouldn’t want to ignore.)
|FHA HECM - New Limits on Insurability of Fixed Interest Rate Products – ML 2014-11 (Effective June 25, 2014) [Download Chart/Checklist - HECM Mortgage Loan Agreement - All Borrowers] AND [Download Chart/Checklist - HECM Mortgage Loan Agreement - Non-Borrowing Spouse]
Updates to FHA Reverse Mortgage Program July 2014|
Changes to HEMC program have been made to eliminate some abuses with the program. As with most major changes, work closely with your staff to assess pipelines and prevent the closing of an uninsurable loan. Verify that your closing document provider has everything in place, including the proper forms.
|FHA Makes Big Changes Regarding HUD REO Appraisals
FHA Makes Big Changes Regarding HUD REO Appraisals July 2014|
It is rare here at MortgageCurrentcy.com that we write about anything that isn’t an official guideline or policy change provided in writing to HUD-approved mortgagees. But this new HUD REO appraisal situation just had to be discussed, if for no other reason than to give you the heads up if you haven’t heard about it. It appears that HUD has given a directive to their HUD REO Asset Managers that prohibits them from providing a copy of the original HUD appraisal to the lenders. Effective immediately.
|FHA HECM - Prohibition on Misleading or Deceptive Program Descriptions or Advertising and Prohibition on Restriction of Mortgagor’s Freedom of Choice – ML 14-10 (Effective June 18, 2014)
There is some crazy stuff going on out there when it comes to HECM originations and advertising practices. This ML serves as a reminder to go back through all your HECM advertising material and update it to comply with the changes AND make its information complete.
|Expired Form ‘Conditional Commitment Direct Endorsement Statement of Appraised Value - Form 92800.5B’. [Download Chart/Checklist - HUD Form 92800.5b - Statement of Appraised Value]
If you already noticed the expiration date on this form, at least now you know that its continued use has been blessed by HUD. You are also typically at the mercy of your company’s LOS system as all your forms are generated from there, so there will probably be a delay from the time the new form is issued until you actually start seeing it in your available forms.
|FHA Annual Recertification and Post-Approval Updates - Mortgagee Letter 14-09 [Effective May 27, 2014]
For company owners and managers: To prepare for all the questions and data requirements, FHA is supposed to be providing tools that simulate the online Audit Related Questions and Financial Data. We have no specific details on when those tools will be made available or how to access them at this time.
|FHA Electronic Signatures – ML 2014-03 (Effective January 30, 2014)
FHA does a good job in this ML explaining all the ESIGN criteria for what constitutes a valid electronic signature. But don’t go running to your Realtors® because there is a lot to this. I suggest that you read this article because I will discuss the 5 things they didn’t explain well.
|FHA New Manual Underwriting Guidelines – ML 2014-02 – Effective April 21, 2014. [Download UPDATED Chart/Checklist, FHA Total Scorecard: List of Conditions Requiring Mandatory Downgrade (updated 4-21-2014)]
FHA New Manual Underwriting Guidelines February 2014|
This was a LONG (17 pages) Mortgage Letter, but you get to read our Readers Digest® version, which has all the important stuff but none of the redundancy. You’ll find three important items that can trip you up. In addition, note the residual income calculation chart is patterned after VA, not some of the other Ability to Repay residual income calculations you may have come across with some investors.
|HUD REO Properties: Ordering New Appraisals & Clarification of Comps Used for Appraisals, Mortgagee Letter 2013-44 (Effective February 5, 2014) [Download Mortgage Talking PointsTM flyer, Appraisal Rules for Homebuyers Buying HUD REO Homes (effective 2-5-2014)]
HUD REO Properties and Appraisals January 2014|
Mortgagees must order a new FHA appraisal for a HUD REO property being financed with an FHA-insured loan if any of the five following conditions exist. Prepare your clients for the possibility of needing a new appraisal if purchasing a HUD REO. It’s better to disclose the additional cost and not need it than to have to add it later to the GFE.
|HUD Defines Qualified Mortgage – Press Release 13-187 – Effective Jan 10, 2014
The rule establishes two types of Qualified Mortgages that have different protective features for consumers and different legal consequences for lenders—Rebuttal Presumption and Safe Harbor QM. However, read the 9 different HUD programs that are exempt from QM.
|FHA Extends Loan Limit Appeals Deadline to January 31, 2014
So many areas saw decreases that I’m sure FHA has had a flood of appeals. The problem is that they will only consider changes for counties where they don’t already have sales data, so many appeals will probably be in vain.
|FHA Maximum Loan Limits, Mortgagee Letter 12-43 (Effective January 1, 2014)
FHA 2014 Loan Limits December 2013|
Many areas have had decreases. Some of them are over $100,000, so this is a big deal – and you can’t rely on your memory as so many counties have changed. You’ll find the entire list as part of this article. However, it can be quite confusing so you’ll also find a link within the article where you can search for the counties you do business in.
|FHA Extension of Annual Recertification Filing Deadline Extended to May 31, 2014 for Title I and Title II Lenders and Mortgagees - Mortgagee Letter 2013-42 with a December 31, 2013 Fiscal Year End
Lenders and mortgagees with a fiscal year end of December 31, 2013 should be prepared to complete the recertification process, no later than May 31, 2014. FHA doesn’t want to deal with the onslaught of lender approval re-certifications during the first quarter of 2014 without their new software in place. So lenders have to push off the task until LEAP is ready. FHA won’t let you do it on the old system.
|FHA Lender Self-Reporting Requirements, Mortgagee Letter 2013-41 (Effective Nov. 13, 2013)
This FHA Mortgagee Letter is 6 pages long—and you may think it has nothing to do with you as a processor or originator. Think again. Read the list of examples that could get you written up in a HUD audit later down the line as well. Important topic to discuss at a staff meeting.
|FHA Condo Update – Mandatory Use of Borrower’s Contract with Respect to Hotel and Transient Use of Property has been Delayed – FHA Info Letter #13-76 (Effective Dec. 2, 2013)
The mandatory use of Form HUD-92561, Borrower’s Contract with Respect to Hotel and Transient Use of Property as announced in FHA INFO #13-42, posted July 19, 2013 for all condominium loans using FHA-insured financing, has been indefinitely delayed. However, read the back story as to why it was required in the first place!
|FHA Eligible Properties in Presidentially Declared Major Disaster Area Super
Storm Sandy for 203(k) insured mortgages – Mortgagee Letter 2013-36 (effective 9-27-13)
Read this only if you can lend in areas where Hurricane Sandy devastated homes. Great news for many homeowners trying to repair homes affected by this incredible storm last fall. I’m not sure why it took a year to get this assistance available, but it’s here now. The guidance appears to be designed to provide a proactive approach for those foundations that were below the recommended flood level.
|FHA Consolidation of Title I and Title II Lender Identification Numbers – Mortgagee Letter 2013-35, FHA (effective March 31, 2014)
While this ML really only affects owners, officers, and managers, it’s a good chance to get some quick education on the difference between Title I and Title II lending authority. Title I loans may be used to finance permanent property improvements that protect or improve the basic livability or utility of the property. Title II loans are what most of us do and are used to finance single-family homes, the most common program being the 203(b).
|DU Government (FHA) Release Notes 4.0 (effective 10-19-2013)
The most important thing you need to know is that none of these minor message changes or enhancements will affect the actual underwriting of your file by FHA TOTAL Scorecard. Most underwriting rule changes are not based on a DU Release version but rather the issue date of the case number. But occasionally the software version can mean the difference between an ‘approve’ and a ‘refer’ decision for your client.
|FHA Application of Escrow Funds in a Refinance – ML 2013-29 (Effective November 1, 2013)
The one big change is that on FHA streamline refinances, they will allow you to add 2 months of annual MIP into the new loan amount—both with or without an appraisal. However, most of this mortgagee letter only affects you if you are the servicing lender originating the new FHA-insured refinance transaction. In all other cases you won’t have access to the funds to apply them anywhere.
|FHA Handling of Collections, Judgments and Disputed Accounts. Mortgage Letter 2013-24 and 2013-25. (Effective 10/15/2013) [Download Charts/Checklists, FHA Judgment, Collection, Disputed Account & Lien Guideline Matrix]
FHA and Collections Judgments and Disputed Accounts September 2013|
It’s great that FHA finally provided more detailed guidelines on the subject, especially regarding manual downgrades and specific aggregate levels on collection and disputed accounts for underwriting. This is one of those times when words are not enough. So, we have taken 10 pages of HUD-speak and condensed down to a one-page Chart/Checklist called “FHA Judgment, Collection, Disputed Account & Lien Guideline Matrix.”
|FHA Back to Work – New Extenuating Circumstance for Loss of Job and/or Income. Mortgagee Letter 2013-26 (Effective 8/15/2013) [Download Mortgage Talking PointsTM flyer, FHA Gets More Home Buyers Back in the Game:
Special Qualifying Exceptions for Job or Income Loss] AND [Chart/Checklist - FHA/VA Derogatory Credit Chart (updated 8-15-2013)]
FHA New Extenuating Circumstance for Loss of Job September 2013|
This is a 15-page mortgagee letter, so there is a lot of detail. There have also been two FHA live webinars with Q&A sessions that have brought out a lot of additional details not clarified in this letter. The information below is a combo of this mortgagee letter and the webinars. For your Realtor marketing convenience I\'ve prepared a Mortgage Talking Points™ on this subject that is attached to this article. HOWEVER, I’d confirm with your investors that you actually have a market for this loan before you trumpet the good news too loudly.
|HUD Atlanta Home Ownership Center – New Email and Case Processing Procedures – FHA Info #13-44 [Download Updated Chart, HUD HOC Contract Info for Case Number Cancellation or Assistance]
On August 2, 2013 the Atlanta Homeownership Center (HOC) will implement new procedures for certain FHA case processing requests. The new procedures will mirror the requirements previously implemented in the Santa Ana, Denver and Philadelphia HOCs.
|FHA Good Neighbor Next Door Sales Program Updated June 12, 2013 (ML 2013-20) [Download Mortgage Talking Points™ flyers, Half-Priced Homes - Good Neighbor Next Door - A Rare Gem]
FHA has updated their Good Neighbor Next Door Program July 2013|
This program enables eligible program participants to purchase, at a 50 percent discount from the list price, a specially designated HUD-acquired single-unit home that is located in a HUD-designated Revitalization Area. HUD has made a couple of updates in this program, and you’ll find a Mortgage Talking Points™ to give to your real estate agents and clients who qualify.
|FHA and Higher Priced Mortgage Loans – HUD Letter – (June 3, 2013)
The good news is, the sky isn’t falling. The bad news is, if you don’t have a good loan process that screens for HPMLs, especially at the beginning of the loan process, it will feel like the sky is falling when you have to tell your client that you can’t do their streamline refinance because they don’t credit qualify. There are two ways an HPML can bite you on an FHA loan.
|HUD Denver and Philadelphia HOCs Implement New FHA Processing Procedures [Effective April 1, 2013] [Download Chart/Checklist, FHA Denver/Philadelphia HOC Case Processing Forms]
If you deal with the Denver and/or Philadelphia HOC, get this new info incorporated into your processing documents. The old email addresses will reject your request and the cover sheets are a must. Updated forms can be found on the Charts/Checklist pages.
|FHA TOTAL Version Scorecard Version 3.1 Released March 2
Right now, this is a non-event. I have spent the last two days searching high and low but cannot find any details about this release or any ‘risk-related’ changes—even though HUD has announced it in an email. I’ve even called HUD – they’ve heard about it, but they haven’t received any directives either!
|FHA Updates MI Language on Form 92900-B [Effective June 3, 2013]
FHA will revise HUD Form 92900-B (“Important Notice to Homebuyers”) to reflect guidance in Mortgagee Letter 2013-04 which changes the period for assessing the Annual Mortgage Insurance Premium (MIP). This guidance is effective for case numbers issued on or after June 3, 2013. To avoid confusion, FHA will not release the revised HUD Form 92900-B until that date.
|FHA Increases Annual MIP [Effective April 1, 2013] & Policy Regarding Cancellations of MIP- [Effective June 3, 2013] - ML 2013-04 (Jan.31, 2013)
FHA MI Premiums Increasing February 2013|
Your client will pay more annual MI and now there¡¯s no way to get out of paying it for a minimum of 11 years. Not only is MI going up but at some point this year your borrowers may be looking at 5% down on loans larger than $625,500. The new rule is not official yet but it is in the works and most likely will happen. (Mortgagee Letter 2013-04, Revision of Federal Housing Administration (FHA) policies concerning cancellation of the annual Mortgage Insurance Premium (MIP) and increase to the annual MIP, January 31, 2013)
|FHA Tightens the Underwriting on Loans with Credit Scores Below 620 – ML 2013-05 (Jan 31. 2013) (Effective April 1, 2013)
Many of us work for lenders who won’t touch an FHA with a credit score under 620, so again, for some of us, this whole ML is a moot point. If you happen to work for a lender that will allow these loans, now is probably a great time to review compensating factors, because if you have a loan with a score under 620 and a DTI over 43%, you are going to need them.
|FHA Updates Appraisal Valuation Protocol FAQs – Guidance on Swimming Pools
FHA and InGround Pools February 2013|
Finally!!! Some helpful direction on the “pool” issue. The latest FAQ update concerns swimming pools. I suggest that you share this new, FHA Appraiser Protocol FAQ with your appraisal management company. These FAQ’s are posted in an obscure place on FHA’s website and they may not know of these updates.
|FHA Clarification on Small Supervised Lender Reporting Requirements ML 2012-29 (Effective 12-29-12)
When HUD announced in ML 11-25 that small supervised lenders (less than $500 million in assets) could submit unaudited financial reports (Call Reports) instead of audited financial statements in their annual reporting, they neglected to mention that the requirement to submit the internal control and compliance reports was eliminated as well. This ML clarifies that oversight. (Interim Reporting Requirements for Small Supervised Lenders and Mortgagees, ML 2012-29, December 21, 2013)
|FHA Maximum Loan Limits for 2013 – ML 12-26 (Effective January 1, 2013)
New Loan Limits for FHA in 2013 January 2013|
Don’t confuse the “nothing changed from last year” message to mean that you don’t have FHA maximum loan amount changes in your originating area counties. It just means that the “floor” and “ceiling” numbers haven’t changed. Check the link provided to see if the loan limits have changed in your county. (FHA Maximum Loan Limits, Mortgagee Letter 12-26, December 6, 2012)
|FHA Extends Anti-Flipping Rule Again – Expires 12-31-14. Mortgage Talking Points™ “Investors Wanted: FHA Extends Flipping Waiver Until 12-31-14
FHA AntiFlipping Waiver December 2012|
While no one was worried that FHA wouldn\'t extend the anti-flipping waiver, they came thru again and extended it to December 31, 2014. to refresh your memory To refresh your memory, we have attached the original waiver that spells out the parameters of when you ARE allowed to do an FHA prior to 90 days of ownership under the waiver. (HUD No 11-292 Press Release - December 28, 1012 )
|HUD & Collection of NMLS ID Data in FHA Connection (Effective January 28, 2013)
It’s finally happened. A few years ago, HUD issued a couple of mortgagee letters about collecting unique identifiers for the NMLS system, but at that time HUD and NMLS did not have it together to hook up the two systems. On January 28, 2013, when you order a case number and the ID or TPO does not match, you’ll get a hard stop and it will slow down the processing of your files.
|FHA Clarification on Net Worth Requirements & Third-Party Originations
The final rule from the Federal Register has all the detail on what was changed and also mentions two important points for company owners and managers—liquidity requirements and third-party originations.
|FHA Temporarily Changes Condo Approval Process – ML12-18 (Effective 9-13-12) [Download Chart/Checklist, FHA Old/New Condo Comparison Chart]
FHA eases some condo approval requirements October 2012|
When I first read this Mortgagee Letter I got frustrated because while they did a bang-up job of underlining all the new stuff, they left you wracking your brain trying to remember what the old rule was – hence, the old/new condo comparison summary which is both a reference chart and Mortgage Talking Points™ for your real estate agents. Go back through your pipeline and see if any condo deals got thrown out due to issues that have now changed and see if you can breathe life into any of them. (Mortgagee Letter 2012-18, Temporary Approval Provisions for the Federal Housing Administration (FHA) Condominium Project Approval Process)
|FHA HOC Single-Family Unique Property Guidelines. [Download - Mortgage Talking Points™ flyer, FHA Unique & Unusual Property Guidelines]
I don’t know if you realized it or not, but the FHA guidelines contain some great information about financing unique and unusual properties. Share the Mortgage Talking Points with your real estate agents AND underwriters.
|FHA Documentation Requirements for Social Security Income - ML 2012-15 (Effective 8-17-12)
FHA and Social Security September 2012|
Giant changes are going on in these much-needed clarifications. All in all, this is great news for everyone. Underwriters finally have something to cover their backsides, and loan files can move forward. Keep this Mortgagee Letter handy until they get the Handbook updated. (Mortgagee Letter 12-15, Documentation Requirements for Income from the Social Security Administration (SSA), Effective August 17, 2012)
|FHA The ‘What’ and ‘When’ of New Construction Documents [Download Chart/Checklist, Requirements for Proposed & Under Construction & Existing Under 1 Year Loans]
FHA New Construction August 2012|
New construction is hot again. HUD updated their Valuation Protocol, with some helpful new construction information for you. We also have a Required New Construction Documents Checklist on the site; you’ll find the link to that at the end of this article. It gives you the documentation requirements for Proposed, Under Construction, and Existing Less Than 1 Year Old. There are even separate requirements for Manufactured Housing. (FHA Valuation Protocol)
|DU for Government Loans Release Notes for July 2012
FHA and SelfEmployed July 2012|
There are 20 pages of updates that will be happening the weekend of July 21, 2012 to DU for Government Loans but most of them are text clarification and housekeeping stuff. The changes you need to know are the updated Self-employed rules in ML 2012-3 and Seller Concession fields.
|FHA Rescission of New Disputed and Collection Account Guidance ML 2012-10 (Effective 7-1-12) [Download Chart/Checklist, Revised FHA Total Scorecard Manual Down Grade Chart]
FHA and Collections July 2012|
Keep in mind that this guidance regarding collections is not an automatic guarantee that your underwriter will disregard a large collection account, especially if it’s recent. Along with disputed accounts comes the issue of mandatory manual downgrades. I have revised and attached the FHA TOTAL Scorecard list of Mandatory Manual Downgrades to reflect the old guidance now in effect again. (Mortgagee Letter 2012-10, Miscellaneous Underwriting Issues – Rescission of Disputed Accounts and Collection Accounts Guidance, June 15, 2012)
|FHA MI Premiums – 11 Year History. [Download Chart/Checklist, FHA 11-Year History PMI Chart]
Here’s a handy reference chart if you’d like to know the MIP increases/changes since 2001. It is helpful if you’d like to know the MIP being paid on FHA loans you are refinancing and to folks who deal with Post Endorsement Technical Reviews, indemnification requests, etc.
|FHA & VA – Special Considerations for Financing Rural Homes. [Download Mortgage Talking PointsTM flyer, FHA & VA – What You Need to Know About Financing for Rural Homes]
FHA VA Financing for CountryRural Area May 2012|
Financing rural properties can be daunting. Mortgage Talking Points provides you and your Realtor with a great tool for those rural property loans. We’ve provided you with a synopsis of the actual FHA and VA requirements.
|BIG clarifications for FHA Collections and Disputed Accounts & Delays in Implementing New Guidance for ML 2012-03 FAQ’s (Effective July 1, 2012)
FHA Underwriting Rule Delayed April 2012|
Go through your pipeline, search for the deals that were getting killed because of collections over $1,000 aggregate, and get them closed! On April 6, 2012 HUD issued an email stating that to allow mortgagees “additional time to adapt their procedures,” the new guidance would not be effective until July 1, 2012. They also stated that for case numbers issued between April 1-8 use of either the new or old guidance is acceptable. (FHA FAQ’s: ML 12-03, Miscellaneous Underwriting Issues HUD Email: FHA Notice to Lenders 4-6-12 )
|FHA Notice - Clarification on Streamlines with Term Reductions [Download Chart/Checklist, FHA Streamline Worksheet (effective 4-6-2012]
FHA has always made it sound like if you had a reduction in term on a refinance it could not be done as a streamline, only as a full credit-qualifying rate and term. Well, this one little sentence in an email changed all that: “Reducing the term of a mortgage is acceptable on a streamline refinance if the new mortgage meets the net tangible benefit test.” (FHA Notice March 20, 2012)
|FHA Answers Manufactured Housing Rules – Quick Facts from Valuation Protocol! [Download Mortgage Talking PointsTM flyer, Manufactured Housing - Quick FHA Financing Facts]
FHA Manufactured Housing April 2012|
So remember last month when we gave you the updated Valuation Protocol FAQs and told you how fabulous they were? Well, we got lots of questions about manufactured homes and FHA financing so I’ve decided to combine some of that information with other FHA fact sheets for you to share with real estate agents. (FHA Valuation Protocol Update 2-28-2012)
|FHA Updates Valuation FAQs – The Best Quick-Education Document Ever For Your Real Estate Agents! [Download Charts/Checklist: FHA Answers Your Appraisal Questions: Inspections, New Construction, Wood-Destroying Insects, 2-Unit & Appraisal Concerns]
FHA Answers Your Appraisal Questions March 2012|
It’s always nice to have a HUD-published resource to defend your position. This information is just the resource to not only answer Realtor questions but address appraisal issues as well if you disagree with an appraiser or underwriter interpretation. Print the chart/checklist to review with staff too!
|Streamlines Now Excluded From Compare Ratio – But Will It Matter?
Streamline refinances, especially non-credit qualifying ones, are risky and most of us are selling these to investors who have imposed more stringent credit score requirements to protect themselves. In response to this, FHA has now decided to exclude streamlines from the Compare Ratio Calculation (basically the FHA version of a lender report card) in hopes that lenders will relax their attitude towards these loans.
|FHA Clarifies Closing a Loan in Name of Third-Party Originator – ML 2012-2 [Download Chart/Checklist FHA FAQs - Sponsored Third-Party Originators]
FHA updated their TPO FAQs, which may help you with other questions you have regarding FHA Connection, appraisals, etc. NOTE: If you don’t hold a valid Title II Origination Approval Agreement, do not close FHA loans in your name. (Mortgagee Letter 2012-2, Closing a Loan in the Name of an FHA-Approved Mortgagee Acting as a Sponsored Third-Party Originator (TPO), February 10, 2012.)
|FHA Waiver Extended on Financial Statement Reporting Requirements for Supervised Lenders and Mortgagees with Less than $500 Million in Assets
The original waiver is due to expire on April 7, 2012. The Acting FHA Commissioner has signed an extension of this waiver good for one additional calendar year through April 7, 2013. It is with a joyful heart that we received the HUD email that extended the Waiver of Financial Statement Reporting. The term ‘audited financial statement’ is synonymous with ‘expensive’.
|FHA Makes Big Changes Regarding Collection Accounts, Disputed Accounts and Self-Employed Borrowers – ML 2012-3 (Effective April 1, 2012) [Download Mortgage Talking PointsTM flyer, What You Need to Know About FHA and Disputed Accounts, Collections and Public Records - Effective 4/1/2012]
FHA Collections Disputed Accounts and Public Records March 2012|
Out of all three of these issues (self-employment docs, collections and identity of interest) I think we are all in agreement that the Collection Account change was a gut punch for everybody. Talk about a deal killer! (Mortgagee Letter 2012-3, Miscellaneous Underwriting Issues, February 28, 2012)
|FHA Updates TOTAL Scorecard User Guide (Effective 2-16-12) [Download Chart/Checklist FHA Total Scorecard: List of Conditions for Mandatory Downgrade]
TOTAL Scorecard means that there are times when the “Approve” doesn’t really mean “Approve” on your AUS findings. I’m referring to the mandatory downgrade rules. TOTAL requires loans to be downgraded to “Refer” status and manually underwritten for various reasons. Ratios are pretty much set in stone unless there are biggie compensating factors.
|FHA Changes Three Mortgage Insurance Premium Levels Within 90 Days – ML 2012-4 (Effective 4-9-12 & 6-11-12)
FHA MI Premiums March 2012|
Make sure you pay attention to case number dates. Mistakes will happen if you under-disclose a borrower’s estimated new payment after April 9, and closing a loan with the wrong MI will be beyond ugly. When determining if a Streamline Refinance is eligible for the reduced premiums you will refer to the endorsement date on the Case Query screen in FHA Connection.
|HUD Adds 8 More States to $100 Down Sales Incentive Program
HUD February 2012|
HUD finally figured out that it was in their best interest to include 8 MORE states, where the homes are eligible for the $100 down sales incentive program. This brings the total to 26 states, plus Puerto Rico and the Virgin Islands.
|FHA Notice Regarding Case Number Cancellation
Because loan limits are tied to case number issuance dates, HUD will allow a lender to cancel a case number and order a new one (provided the property and borrower remain the same) so that the borrower can use the higher loan limits. If you have anybody in your pipeline that got caught in the loan limit snafu but would love to bring in less down payment on their deal, go get them a new case number. (Email Notice. Jerrold H Mayer, HUD = Notice Regarding Case Number Cancellations, dated 12-21-11)
|FHA - FAQs on Uniform Appraisal Dataset Updates
This FAQ clarifies a few things and I think you’ll especially find the section about ‘adjusting comparable sales’ helpful. Underwriters, this article will primarily be helpful to you as you review appraisals and need insight to instructions given to FHA appraisers.
|DU for Government Release Notes – FHA and VA Updates- February 18, 2012 [Chart/Checklists, FHA and VA Loan Limits for 2012]
Fannie Mae has announced that they will update DU for Government Loans to reflect the new 2012 FHA and VA loan limits, BUT not until the weekend of February 18, 2012. Manually check every VA and FHA loan file for loan limit compliance. DO NOT accept DU findings as valid until you have done this. (Fannie Mae – DU For Government Release Notes February 2012 Release – Dated 12-20-11)
|FHA Maximum Loan Limits – through December 31, 2012. ML 2011-39. [Download Mortgage Talking PointsTM flyer, FHA Maximum Loan Limits - November 18, 2011 to December 21, 2012] and [Charts/Checklists, FHA Loan Limit Areas - at Ceiling and Above / AND / Between Floor and Ceiling]
FHA Loan Limits December 2011|
Go to the links we’ve provided and print out your own list for just the states/counties you are originating in. Use the attached Mortgage Talking Points to fill in the six local county loan limits in your area and distribute to your Realtors. This is as current as it’s going to get. ()FHA Maximum Loan Limits, Mortgagee Letter 2011-39, December 2, 2011
|Condominium Reviewer Registry on FHA Connection
FHA now requires that all lender staff responsible for reviewing condominium approval packages must be registered in FHA Connection as a condominium reviewer by December 5, 2011. (HUD Email November 19, 2011)
|FHA Approved Lender Requirements – Q & A Conference Call
On October 25 FHA held an Industry Call Webinar in regard to lender approval requirements. HUD has published additional information on the subject in the form of an FAQ which you can download at the end of this article. I’ll bet that the majority of FHA lenders need to tweak something within their organization to create true alignment. (FHA Industry Conference Call FAQs, October 25, 2011)
|FHA Handbooks Website Links Have Temporarily Changed – October 28, 2011
What a pain for those of us who use the online electronic versions of the handbooks regularly! We have not been able to access these handbooks and HUD isn’t making any promises on when they will be available again. They have provided new links for 4155.1; 4155.2 and 7610.1.
|HUD REO’s and $100 Down Paying Making a Comeback
HUD REO 100 down payment November 2011|
The popular $100 down-payment sales incentive that HUD offers on REO properties is an elusive creature. Nine months ago it was offered in very few states but seems to be making a comeback. HUD finally put a state list together and links to states who are participating are included in the article.
|DU for Government Release Notes – VA Approvals About to Get Tougher – FHA Message Updates – FHA & VA Loan Limit Changes (Effective December 17, 2011)
The big update here is that the risk assessment is going to get tougher on VA loans submitted under the updated version. So on Friday December 16 you could have an Approve/Eligible that switches to a Refer/Eligible on Monday December 19 when you adjust something in the loan and rerun it through DU. Check every VA loan with a credit score under 680 and try to get it buttoned up before the new version hits. Just sayin’….
|No Annual MI on 15 Year Loans at < 78% LTV – ML 2011-35 (Effective April 18, 2011)
FHA MI October 2011|
FHA made this announcement months ago in an email. This mortgagee letter is simply the ‘official’ word. (Mortgage Letter 2011-35, Annual Mortgage Insurance Premiums for Loans With Terms of 15 Years or Less and a Loan to Value Ratio of 78 Percent or Less at Origination, September 21, 2011)
|FHA Revises Approved Lender Requirements – ML 2011-34 (Effective 9-23-11)
This one is for mortgage company owners and managers. Read this Mortgagee Letter carefully. There are a lot of details. Now every registered office and branch can originate in all 50 states, as long as all of the state’s requirements are met, which is easier said than done. (Mortgage Letter 2011-34, Revised Lender Approval Requirements, September 23, 2011)
|FHA Changes 2 Lenders Forms – “Informed Consumer Choice Disclosure & Conditional Commitment DE Statement of Appraisal” (92800.5b) – (Effective Nov 1, 2011).
These form change announcements aren’t earth shattering, but you need to know since one of them is a mandatory change effective November 1, 2011. Interesting note: I was planning on providing you with the new version of this form; however when I go on HUDCLIPS to retrieve the new form it has not been corrected yet. We will post it when it comes available. (HUD Email - August 16, 2011)
|FHA Maximum Loan Limits – ML 2011-29 (Effective October 1 to December 31, 2011) [Download 2 Mortgage Talking Points™ flyers, Loan Limit Changes in October 2011? What's Going On? What's the Difference Between FHA & VA? AND FHA Loan Limits October thru December 2011]
FHA Loan Limits September 2011|
Since the Continuing Appropriations Act of 2011 dealt with “fiscal year,” loan limits are good until September 30, 2011. And since fiscal years don’t jive with the normal “loan limit” process, we now have this ‘band aid’ announcement that gets us through until the end of the year. Maybe. Warning: Because we could still have federal action that extends the current loan limits, we may be throwing this entire Mortgagee Letter out the window come September 29 (since the government loves to wait until last minute on this stuff). (FHA Mortgagee Letter 2011-29: Federal Housing Administration’s (FHA) Maximum Loan Limits Effective October 1, 2011 through December 31, 2011)
|FHA Uniform Appraisal Dataset (UAD) and Appraisal Reporting Forms – ML 2011-30 – Effective January 1, 2012. [Download Charts/Checklists: Uniform Appraisal Dataset Code Chart]
FHA Appraisal Codes September 2011|
There seems to be some confusion (yes, even with appraisers) because Fannie and Freddie required the use of UAD codes on 9-1-11, yet FHA has delayed them until 1-1-12. (Mortgage Letter 2011-30, Uniform Appraisal Dataset (UAD) and Appraisal Reporting Forms)
|FHA - Alternative Reporting Requirements for Small Supervised Lenders and Clarification of Requirements for Supervised Lenders in a Parent-Subsidiary Relationship – ML 2011-25
All supervised lenders seeking FHA approval are now required to include audited financial statements as part of their application package. However, this new guidance appears to let banks and credit unions off the hook when it comes to audited financial statements, at least through April 7, 2012. (FHA Mortgagee Letter 2011-25)
|FHA Appraisal Newsletter – Summer 2011 – UAD, Sales Concessions and Stigmatized Properties. [Download 2 Mortgage Talking Points™ flyers, Sales Concessions & FHA Appraisals AND Stigmatized Properties & FHA Appraisals]
FHA appraisals August 2011|
We got our hands on a HUD newsletter created for FHA Roster Appraisers, with some great insight on what appraisers are directed to do when it comes to certain appraisal issues. That’s why you’ll find 2 Mortgage Talking Points™ flyers to share with your real estate agents. (FHA Appraiser Newsletter, Summer 2011)
|FHA Condo Approval Guide. [Download Charts/Checklist – FHA Condo Approval Requirements Checklist & Approval Letter Cover Sheet}
FHA Condo Approval Requirements August 2011|
Last month, a request came from a subscriber to create a basic Condo Approval Requirements Checklist that could be distributed to Realtors. Great idea! This checklist is attached, and while not exhaustive, definitely gives the basic outline of what FHA is looking for to approve a project. (FHA - ML 2011-22)
|DU For Government Release Notes – More Updates the Weekend of 9-17-11! [Download Mortgage Talking Points™ flyer, FHA & VA Website Resources] and [Download Charts/Checklists - FHA & VA Website Resources]
DU Update will include new loan limits. Applicable loan limits will be tied to the closing date. DU can’t tell when a file will close, so it will just be basing its county limit assessment on whenever the case file is submitted. Case files submitted before September 17th will use current limits. You absolutely cannot trust DU to determine if your loan is within county loan limits or not. YOU WILL HAVE TO DO A MANUAL CHECK ON EVERY FILE!!!!! (DU For Government Release Notes, July 19, 2011)
|DU for Government Release Notes from Fannie Mae - Updated June 21, 2011
Fannie Mae sent out an updated announcement about the June 18 DU updates. The change was regarding the verbiage explaining the difference between FHA and VA’s treatment of Mortgage Credit Certificates. One other item to note -- DU implemented a new message for Hope for Homeowners (H4H) program which FHA is terminating on September 30, 2011. (DU for Government Release Notes, June 21, 2011)
|FHA Termination of Hope for Homeowners Program - ML 2011-20 (Effective September 30, 2011).
FHA doing away with H4H July 2011|
Like so many other well-intentioned government programs, this one made for good press, but performed dismally when it came time to actually deliver it to the masses. If, by chance, you are originating these loans, be sure to note the important dates mentioned above. July 29 is your last day to order a case number. (FHA ML 2011-20: Termination of the HOPE for Homeowners [H4H] Program, June 10, 2011)
|FHA Consolidates & Updates Condo Approval Process, ML 2011-22 (Effective August 29, 2011). [Download 3 Charts/Checklists!]
FHA Condo Projects July 2011|
Hallelujah! It took them two years, but we finally have a Guide for condominium project approvals HUD has issued a 9-page guide and there are 7 significant changes you need to know about. There is also a ‘Condominium Approval Implementation Schedule’ attached that lists each section of the Guide, if there was a policy/process change, and when it will go into effect. (ML 2011-22, Condominium Approval Process for Single Family Housing – Consolidation and Update of Approval Requirements, June 30, 2011)
|The Party May Be Over - Potential Decrease in FHA Loan Limits Beginning October 1, 2011. [Download Chart/Checklist Counties Affected by Possible Decrease in FHA Loan Limits]
Unless Congress takes action to extend these limits, we’ll be going back to the loan limits determined under the Housing and Economic Recovery Act (HERA) on October 1, 2011. There will be 669 counties affected by the change. Check the HUD Brief and see if you have counties in your area that will be affected. Then get the word out to your Realtors and borrower fence-sitters if you do. [Download Chart/Checklist Counties Affected by Possible Decrease in FHA Loan Limits] (Potential Changes to FHA Single Family Loan Limits beginning October 1, 2011 From Implementation of the Housing and Economic Recovery Act of 2008 (May 26, 2011) )
|Foreclosure, Bankruptcy and Wait Periods – New Challenges [Download Mortgage Talking Points™ flyer, FHA/VA Derogatory Credit Chart & Charts/Checklist - FHA/VA Reference Chart for Loan Originators]
Mortgage Talking Points flyer June 2011|
A whole new twist has come into play and being interpreted by FHA/VA when it comes to a mortgage included in a bankruptcy. I don’t want to mention any names here (Bank of America) but there seem to be a lot of situations where the mortgage has been included in the bankruptcy, the bankruptcy has been discharged, but the lender has yet to complete the foreclosure process.
|FHA’s “PowerSaver” Loan – HUD Announcement 10-251
FHA HUDs PowerSaver Loan May 2011|
While HUD actually announced the “PowerSaver” loan late last year, it is not until recently that you have started to hear about it. With the recent spike in gas prices, energy conservation is the new buzz and this loan plays perfectly into that. There is a good chance you are not working for one of the 18 lenders HUD has partnered with for this program. However, did you know that Fannie Mae has a similar type of program that has been around since last year? Link to the details provided. (HUD No. 10-251)
|DU For Government Loans Release Notes (Effective 6-18-11)
DU for Government Loans is for FHA and VA lending, is updated infrequently and is not tracked by a “Version” number. We just always call it “DU for Government Loans” and we usually have no idea when it was last updated. Well, the weekend of June 18th, DU will be updated to incorporate FHA and VA guidance issued back from March of 2009. (I wasn’t kidding about the infrequent updates.) (DU For Government Release Notes, April 21, 2011)
|Use of HUD/FHA Logo, Name and Acronym in Advertising – ML 2011-17 (Effective May 15, 2011) [Download Charts/Checklist: Updated HUD Logo: Must Use by 5-15-11]
Sample HUD Logos May 2011|
Please do not take this guidance as an idle threat. I’ve seen the published lists of fines imposed for these violations-some with a $30,000 price tag. Never put any advertising out that is FHA/HUD related unless you have clearance, preferably in writing, from someone who is designated as your quality control gate keeper. (Mortgagee Letter 2011-17, Use of HUD/FHA Logo, Name and Acronym in Advertising, April 15, 2011)
|HUD Big Deal Information Handled in a couple of Little Emails from HUD: Case Number Cancellation Report; Annual MIP on <15 year term mortgages <78% LTV; Disputed Accounts and TOTAL Manual Downgrades
FHA Good News May 2011|
As always, I am rocked by the way HUD distributes information sometimes. Things that make a HUGE impact on our files are a two-line statement in an email. The email notices that effect loan origination cover the following: Case Number Cancellation Report; Annual MIP on
|HUD issues FAQ’s on ML 2011-11, FHA Refinance Transactions (Effective 4-18-11)
ML 2011-11 had to be the most poorly constructed ML EVER by HUD so they had to come up with an FAQ to clarify things. This FAQ was announced via the HUD email notification system and had the comment “read it carefully and thoroughly”. When you go through it you find that not only did they clarify (big time) a few issues, but they actually CHANGED an implementation date on the ML. (FAQs on ML 2011-11, April 18, 2011)
|Elimination of FHA’s Origination Fee Cap for the 203(k) Rehabilitation Mortgage Insurance Program – ML 11-18 (Effective 4-26-11)
FHA 203k May 2011|
HUD is trying again, to generate more appeal for the 203(k) loans. While the 203(k) streamlines aren’t too bad, we all know the full-blown 203(k) rehabs are labor intensive. (Not to mention how limited the investor options are for lenders.) With so many trashed foreclosures on the market, especially HUD’s own REOs, this seems a smart move to get more originators interested in doing them. (Mortgagee Letter 2011-18, Elimination of FHA’s Origination Fee Cap for the 203k Rehabilitation Mortgage Insurance Program, April 26, 2011)
|FHA Says $100 Down REOs – Closing Costs Cannot Be Included in the Loan Amount – ML 2011-19 dated 4-28-11
FHA Mortgage Talking Points May 2011|
|HUD Allows Condo Projects with Leasing Restrictions to be FHA Approved (Effective 3-18-11) [Download Mortgage Talking PointsTM flyer, Getting the Word Out to Condo Homeowner’s Associations]
Mortgage Talking Points flyer April 2011|
FHA will now allow a condominium project to be eligible for FHA project approval if it restricts leasing of units by unit owners. This is a great opportunity to get out and talk with your Realtors (see the attached Mortgage Talking Points) and talk to HOAs about being proactive within their project to acquire or retain FHA approval. (Waiver of Legal Restrictions on Conveyance, March 18, 2011)
|HUD Waiver of HO-6 Insurance Coverage Expires 4-28-11 - [Download Mortgage Talking Points™ flyer, HO-6 Condo Insurance Coverage Required for FHA Financing]
Mortgage Talking Points flyer April 2011|
If you have been able to originate FHA condo loans without HO-6 coverage it is an expense that you need to start disclosing to your FHA condo borrowers. Forgetting this expense can kill deals with DTI problems and unhappy clients who didn’t realize what their true monthly expense would be. (HUD Waiver of HO-6 Insurance Coverage to Expire – ML 2009-46B)
|FHA Changes Annual Mortgage Insurance Premium and Guidance on Case Numbers – ML 11-10 (Effective April 18, 2011) Charts/Checklist - Updated FHA MI Premium Chart – Purchase & Refis]
Mortgage Talking Points March 2011|
With the increase in annual premiums HUD took huge steps to prevent case number hoarding that became a popular sport when MI premiums started to rise last fall. And make sure you pay attention to case number dates. Ugly mistakes will happen if you under disclose a borrower’s estimated new payment after April 18 and closing a loan with the wrong MI will be beyond ugly. (Mortgagee Letter 2011-10, Annual Mortgage Insurance Premium Changes and Guidance on Case Numbers, February 14, 2011)
|FHA Refinance Transactions – ML 2011-11 – We think it’s Effective February 14 April 14, 2011 [Download Charts/Checklist - Updated FHA Streamline Refinance Worksheet]
There are some big updates with this ML. Changes are typically frustrating anyway, but FHA really out did themselves this time when they came up with a whole new level of confusion with the effective date of “must be implemented within 60 days of this mortgagee letter”. Updated FHA Streamline Refi Worksheet Included.
|HUD REO $100 Down Sales Icentives are Dwindling
The $100 down FHA financing sales incentive is not a ‘nationwide’ blanket option. It is offered on a state-by-state basis and many states have had the incentive discontinued. Link provided in this article to HUD Asset Managers for you to double check.
|Elimination of the Master Appraisal Report (MAR) [Effective 1-12-11]
There are no surprises here. With the loss of the 1 year appraisal validity period in 2009 and what I’m sure were significant losses to the FHA Insurance Fund that can be tied to the use of MARs when the housing market started to nose dive, it makes sense to have an individual appraisal on every property. (Mortgagee Letter 2011-07, Elimination of the Master Appraisal Report (MAR))
|HUD Extends Flipping Waiver (Expires December 31, 2012) [Download Mortgage Talking PointsTM flyer, FHA Flipping Waiver Extended to December 31, 2012]
FHA February 2011|
While the extension was welcomed, many are frustrated with the fact that a lot of investors are no longer embracing the ‘entire’ waiver. Specifically the ‘homes with less than 20% appreciation’ part of the waiver. (FHA Extends Anti-Flipping Waiver to Help Stabilize Housing Market, January 28, 2011)
|FHA Capture of NMLS Information – ML 2011-04 (Effective 4-1-2011)
It’s all about accountability. And HUD is determined to drill down to the base street level of origination to hold some feet to the fire. WARNING: Be VERY suspicious of loan leads fed to you by other originators. They could be effectively using your NMLS ID to park all of their “fraudulent” or “high risk” loans, while they use their own ID for all the clean applications. Many processors are licensed as well. Protect your NMLS ID like you’d protect your social security number. (FHA Capture of National Mortgage Licensing System and Registry (NMLS) Information, ML 2011-04, January 5, 2011)
|FHA Extension of Temporary Guidance for Condominium Policy – ML 2011-03 – (Expires June 30, 2011) [Download Mortgage Talking PointsTM flyer, FHA Extends Condo Approval Dates]
FHA Condo Approvals January 2011|
Rioting and national mayhem has been postponed. But condos are a tough market and extending this guidance will give a small boost to buyers and sellers. But the sad reality is that all the projects approved under these guidelines will eventually lose their approval, leaving unsuspecting buyers owning units in projects that are no longer FHA friendly. Could get ugly. (Extension of Temporary Guidance for Condominium Policy, Mortgagee Letter 2011-03, January 5, 2011)
|FHA Quality Control Requirements for Direct Endorsement Lenders – ML 2011-02 (Effective January 5, 2011)
Check your QC procedures and make sure you are aligned with everything listed in the Mortgagee Letter. If you are becoming a Sponsored Originator, there will be some adjustments as you hand the QC reigns over to your sponsoring lender. (Quality Control Requirements for Direct Endorsement Lenders, Mortgagee Letter 2011-02, January 5, 2011)
|HUD Announces Federal Home Loan Bank – Affordable Housing Program, Homeownership Set-Aside Grant Program – ML 2010-42
Important Note: If you’re reading this because you saw the words “Grant Program” and are hoping for a new source of down payment assistance for your clients – well??? These grant funds are not new and unless you work for one of the FHLB member financial institutions, you don’t have access to this program. (Am I a downer or what?) (Federal Home Loan Bank – Affordable Housing Program, Homeownership Set-Aside Grant Program, Mortgagee Letter 2010-42, December 28, 2010)
|HUD Temporary Extension for Loan Correspondents and Direct Endorsement (DE) Approval Requirement for Principal-Authorized Agent Originations (Expires March 31, 2011)
Loan Correspondents got a narrow reprieve as they scrambled to close out current pipelines under their FHA approval that was set to expire on December 31, 2010. While no new loans can be originated in their name, they can finish up old business. (Letter from Commissioner Stevens: Special Edition, December 20, 2010)
|Flood Zone Requirements for FHA Insured Mortgages – ML 2010-43 (Effective March 1, 2011) [Download Mortgage Talking PointsTM flyer, FHA Flood Zone Requirement Chart]
FHA Flood Insurance January 2011|
This has “big deal” potential regarding properties located in a CBRS. The chart included is an easy-to-read resource on flood insurance requirements for New Construction, Existing Construction, Manufactured Housing, Condos and Other Properties. (Flood Zone Requirements for FHA Insured Mortgages, ML 2010-43, December 28, 2010)
|FHA - HUD Announces Extension of Condo Approval Dates
This is one big sigh of relief to the condo market. At least it will keep FHA financing as a viable option for many properties. The extension isn\'t forever though and you should talk with Realtors about encouraging HOAs to be proactive and get their project approved.
|FHA’s 2011 FHA Maximum Loan Limits – ML 10-40 (Effective January 1, 2011) [Download Mortgage Talking PointsTM flyer, FHA 2011 Maximum Loan Limits & Charts/Checklists: FHA Max Loan Limits – Attachment 1, FHA Max Loan Limits – Attachment II]
FHA Loan Limits Mortgage Talking Points flyer December 2010|
Print out the loan limits and double check loan amounts until you know for sure that your AUS system has implemented the new 2011 limits. Don’t assume that automated underwriting will “catch” a loan amount over the limit. You could easily close an uninsurable loan. Charts/Checklist with Floor Ceiling Limits & Mortgage Talking Points™ for your real estate agents. (2011 FHA Maximum Loan Limits, Mortgagee Letter 2009-40, December 1, 2010)
|FHA Mortgagee Eligibility Requirements and Clarification of FHA’s Electronic Annual Certification Requirements and Procedures – ML 2010-38 (Effective November 17, 2010)
Owners and managers only; this one is for you. Review this ML letter in detail to be sure you are ready for your annual certification with HUD! (Mortgagee Eligibility Requirements and Clarification of FHA’s Electronic Annual Certification Requirements and Procedures, Mortgagee Letter 2010-38, November 17, 2010)
|FHA Announces PowerSaver Pilot Program
Well, like a lot of HUD programs and announcements lately, it makes great press, but the reality of actually delivering the product to the consumer in a timely, cost effective manner while making it even semi-profitable for the originators and lenders remains to be seen. If you were hoping to make this new product your next “big” marketing campaign, I’m afraid I’m not just a “pin” to burst your bubble… I’m a pretty much an “ice pick”. (HUD Announces Pilot Program to Help Homeowners Pay for Energy Improvements to Their Homes. HUD No. 10-251, November 9, 2010)
|FHA Borrower Certification for FHA Refinance of Borrowers in Negative Equity Positions – ML 2010-35 [Download Charts/Checklist – FHA Refinance Of Borrowers in Negative Equity Positions Borrower Certification. (Effective 9-19-10)]
The Mortgagee letter 2010-35 includes a sample certification form. If you are originating “negative loans”, get this form into your loan process and disclosures. (Mortgage Letter 2010-35, Borrower Certification for FHA Refinance of Borrowers in Negative Equity Positions, October 8, 2010)
|FHA Mortgage Insurance – New Premiums & Potential Cash Refunds [Download Charts/Checklist – FHA HOC Assistance Request For Case Number Cancellation Fax]
The new UFMIP calculations could result in cash refunds to refinance customers when their MI refund is larger than their new UFMIP. Since lenders cannot credit more to the borrower than the amount of their new UFMIP when calculating a new loan amount, the unapplied refund amount will have to be dispersed by HUD. However, they are not telling us how this will occur—stay tuned!
|Commissioner Stevens says…Toughen up Your Quality Control or Pay Up (Oct 21, 2010)
FHA is looking to specifically crack down on lenders who have the special authority to insure files on their own, known as LI (Lender Insurance) lenders. Expect indemnifications to be on the rise if these changes go through, and they will. (Letter from David H. Stevens, Assistant Secretary for Housing/Federal Housing Commissioner - dated 10/21/2010)
|FHA Requirements for Combined Loan Amounts – ML 2010-36 (Effective 10-22-10)
This was an ooops--that should have been caught sooner. Anyway, all better now. Just feel bad for any of you who were trying to close files that were caught in the middle of this CLTV misinformation. (Mortgage Letter 2010-36, Requirements for Combined Loan Amounts, October 22, 2010)
|Heads Up on HUD REO Homes – New Software Changes Mean Delays for Your Borrowers
FHA Heads Up on HUD REO Homes November 2010|
On June 14, 2010 HUD announced a new system for Management and Marketing (M & M) of its REO properties. Transitioning over to new computer system. All borrowers currently under contract on a HUD home should be advised of possible delays and potential extra costs and complications due to rate lock extensions, appraisal expiration, etc. Loan officers and processors should also advise borrowers to communicate with their real estate agents regarding any required contract extensions due to these delays.
|FHA Condominium Recertification Process – Updated Forms Plus Fact Sheets [Download Checklist - FHA Condo Recertification Forms]
FHA HUDs new Condo Recertification Checklist November 2010|
HUD just issued an updated version of Condo recertification form (7 pages). Even if you and/or your company have decided not to take on the task of getting projects recertified, at least you’ll have the information to pass on to agents and HOAs who are interested in seeking renewed FHA approval. As for the “Consumer Fact Sheet”, honestly I cannot believe that we won’t see more agents, lenders and HOAs sued in the future over non-disclosure of critical facts by disgruntled homeowners aghast at how much information they were NOT told about the property they were buying.
|FHA Connection Enhancements - Goodbye Mini-Eagle; Hello Sponsored Originator. FHA Gears Up for the Change. ML 2010-33 (Effective Oct 4, 2010)
If you are a currently approved correspondent lender who won’t switch to sponsored originations until January 1, 2011, you will continue doing FHA business as usual until that time. On January 1, 2011 the changes in this article will apply to you. If you are not, then these changes went into effect on October 4, 2010. (Mortgagee Letter 2010-33, FHA Connection Enhancements to Support Third Party Originations (Sponsored Originators), September 21, 2010)
|FHA Rules On Job Transfers - Avoiding Transfer Troubles [Download Mortgage Talking PointsTM flyer, Avoiding Employee Transfer Troubles: What FHA Requires!]
New Job or Company Transfer October 2010|
Contracts for employment or offer letters, as we typically call them, are under a whole new microscope when this projected income is being used for loan qualifying and a loan will close prior to the start date. [Download Mortgage Talking PointsTM flyer, Avoiding Employee Transfer Troubles: What FHA Requires!]
|FHA New MI Premiums – ML 2010-28 – [Effective October 4, 2010] [Download FHA MI Premium Chart]
We discovered that because of the lower up-front premium, the client actually had a lower mortgage balance, but because the monthly MI increased, the client will have a higher monthly payment. There is a new FHA MI chart and you can find it in the ‘Charts and Checklists’ section under FHA. NOTE: There will no longer be a discounted up-front premium for first time homebuyers with HUD approved counseling. (Mortgage Letter 2010-28, Changes to FHA Mortgage Insurance Premiums, September 1, 2010)
|FHA Condominium Recertification Process – Detailed Instructions for ML2009-46A & 46B.
So imagine my shock and awe when FHA came out (on 8-23-10) with instructions, a checklist, and a cover sheet on the condo recertification process. This is yet another marketing opportunity for you to shed some light on how to get the condo projects in your area recertified or re-approved.
|FHA/VA Derogatory Credit Rules - [Download Mortgage Talking PointsTM flyer, FHA/VA Derogatory Credit Chart and FHA/VA Derogatory Credit Chart (expanded version for loan officers).]
Mortgage Talking PointsTM September 2010|
Don\'t be surprised if you learn a thing or two. Included is a Derogatory Credit Chart for FHA and VA loans AND as a bonus, you get a Mortgage Talking PointsTM flyer on the subject for your Realtors. Keep in mind that the Realtor version contains the primary items of interest to them, while the full chart for you, goes into much more detail.
|FHA Implements New Minimum Credit Scores and LTV Requirements – ML 2010-29 – [Effective October 4, 2010]
FHA Implements New Minimum Credit Scores LTV Requirements September 2010|
The only originators affected by this one are the ones working for direct sellers, because most of us haven’t been able to do an FHA loan on a borrower with a credit score under 620 for quite a while. Frankly, I was more excited about what DIDN’T happen with this ML - they didn’t reduce the seller contributions (yet). (Mortgagee Letter 2010-29, Minimum Credit Scores and Loan-to-Value Ratios)
|New Combined Loan-to-Value Requirements for Refinance Transactions (Effective September 7, 2010) ML 2010-24
FHA has reverted back to way it used to be done in 2007. Check your pipelines! Get case numbers ordered now if you need to exceed these new limits. Call the high CLTV fence sitters and let them know that they will be out of luck on September 7, 2010. (FHA Mortgage Letter 2010-24, Combined Loan-to-Value Requirements for Refinance Transactions, August 6, 2010)
|HUD Announces Upcoming Change to FHA Mortgage Insurance (Effective October 4, 2010)
FHA Buyers have incentive to buy NOW August 2010|
With this change happening so fast, who knows if DU and LP will get updated quick enough to implement “reminder” language for the new MI. Review all of your issued FHA GFE dates to determine which ones are still in play (and haven’t had case numbers ordered) on October 4 and work with your compliance officer to determine if new ones should be issued.
|New FHA HECM – Reverse Mortgage - [Download Charts/Checklists - HECM Case Binder Submission Form] ML 2010-22 (Effective 10-4-10)
For simplicity sake, I would incorporate use of the form now, as there seems no point in waiting until the October deadline. (FHA Mortgage Letter 2010-22, Home Equity Conversion Mortgage (HECM) Program Submission of Case Binder Documents, July 20, 2010)
|FHA 203K Streamline Niche – [Download Mortgage Talking PointsTM flyer, Cure for the Cosmetically Challenged Home]
Mortgage Talking PointsTM August 2010|
$35,000 anybody? That’s the amount available to a FHA borrower who wants to purchase an ‘ugly duckling’ and turn it into a ‘swan’. The cool part is that the repairs do NOT have to be ‘FHA required’. Mortgage Talking PointsTM flyer, Cure for the Cosmetically Challenged Home. More info can be found in the FHA Loan Origination Manual.
|FHA-Letter from Commissioner David H. Stevens – June 2010, Re: RESPA, Home Warranties, Pre-Approvals, Use of Worksheets, SAFE Act.
FYI New Rule Published on June 25 2010 July 2010|
This newest letter from Commissioner Stevens (which, by the way, has no date on it ANYWHERE...just a “June 2010” notation in the web address when you click on the link) has a couple of items worth mentioning—Pre-approvals, worksheets explained & home warranty kickbacks to real estate agents are illegal. (Letter from Commissioner David H. Stevens – June 2010)
|FHA Final Rule on Approved Lenders – ML 2010-20 – 1st Phase (Effective 5-20-10)
Official Net Worth Requirement- 3 Phases: If you are a loan correspondent and not planning on pursuing a lender approval for 2011 you’d better start looking for your sponsoring lenders who will take you on. This year will be over before you know it and FHA is a mighty player in the mortgage game. (Implementation of Final Rule FR 5356-F-02, “Federal Housing Administration: Continuation of FHA Reform – Strengthening Risk Management through Responsible FHA-Approved Lenders, Mortgagee Letter 2010-20, June 11, 2010)
|FHA Assistant Request Form: Case Number Transfers and Uncooperative Lenders – What to Do? [Includes Charts/Checklist: FHA HOC Assistant Request Form for Case Number Transfer.]
Ever had a problem with getting another lender to transfer an FHA appraisal to you? In a recent FHA online seminar they re-stated the procedures outlined in the Handbook 4155.2 regarding requesting assistance from a Home Ownership Center (HOC) when a lender won’t respond to a case number transfer request. So, we’ve created a handy fax cover sheet for you to use!
|FHA Provides "suggested" Condo Approval Checklist. [HUD Cover Letter/Checklist: For Condo Initial Project Approval Included]
There was no drum roll, no flare, no official announcement whatsoever, but FHA did quietly post a suggested cover letter checklist for an initial condo approval submission and it’s included with this article. [HUD Cover Letter/Checklist: For Condo Initial Project Approval Included]
|FHA Streamline Refinance Transactions and FHA TOTAL Scorecard - No Longer a Fatal Error! ML 2010-19 (Effective May 27, 2010)
Regardless of case number assignment date, lenders may score streamline refinance transactions through FHA TOTAL and not process the transaction as a rate-and-term refinance. I have already seen lenders respond favorably so there shouldn’t be any ugly lender overlays on this one but always double check. (Streamline Refinance Transactions and FHA TOTAL Scorecard, Mortgagee Letter 2010-19, May 27, 2010)
|Letter from FHA Commissioner David H. Stevens (Effective April 29, 2010 to April 29, 2011)
We’ve read the letter…the items discussed that are actually new that you will want to know about: Temporary waiver of HO-6 insurance on condo loans; Next steps in expansion of electronic signature acceptance; Definition of a ‘small business’ lender for net worth requirements.
|FHA Net Worth Requirements [Download FHA Net Worth Requirements Timeline Chart]
We’ve created a FHA Net Worth Requirements Timeline Chart for you. Special Note: the new net worth requirements mentioned lenders approved as “small businesses” and provided for a lower requirement for these lenders. Most of us were going, “Huh?” We had never heard of this classification – now we have the answer for you!
|HUDs Stance: Schedule C tax loss of income by a non-purchasing spouse should not be counted against the borrower spouse.
I was surprised to hear that some lenders were counting a non-purchasing spouse\'s Schedule C tax loss of income against the borrower spouse. This disturbed me on multiple levels so I posed the following question to HUD, but now we\'ve got it in writing.
|FHA Says NO Audited Financial Statement Requirements for Brokers - Finally We’ve Got Something in Writing! [Download Official HUD Letter From David Stevens]
Finally, (thanks to subscriber Kelly Whytock), we have something in writing from the HUD Lender Assessment SubSystem that specifically says that currently approved loan correspondents are not required to submit audited financials this year. (Announcement Regarding FHA Loan Correspondent Renewal)
|FHA Electronic Signatures on Third Party Documents – ML 2010-14 (Effective April 8, 2010) [Download copy of E-Sign Act]
It’s a sign (no pun intended) of the times… either that or the National Association of Realtors AND Apple yelled REALLY loud since the new iPad works great for electronic signatures. Double check that you can read the electronic signatures and dates when both viewing your sales contracts electronically and when you print them out…so much for saving trees! (Mortgagee Letter 2010-14, Electronic Signatures on Third Party Documents, April 8, 2010)
|HUD Issues Appraisal Independence FAQs
There are 6 pages of FAQs here and they are helpful in better understanding FHAs appraisal ordering policies, but it was the broker specific items I thought many of you would be interested in. It may be 6 pages long, but it’s a large-font, fast read and worth the time. (FAQs – ML 2009-28 – Appraisal Independence)
|FHA Case Number and FHA Roster Appraiser Assignments ML 2010-15 (Effective 2-15-10)
No. The effective date on this isn’t a typo. The ML was issued on April 20. The effective date is February 15. Get this on the processor and underwriter’s radar! Make sure YOU know exactly what the processing practices are in the office or create new ones to avoid having any problems. There is potential ugliness if you don’t. (Mortgagee Letter 2010-15, FHA Case Number and FHA Roster Appraiser Assignments, April 20, 2010)
|FHAs Response to Appraiser/Mortgagee Frustrations with AMCs - Just Deal With It
HUD created an FAQ, addressing all of the complaints we outlined in this article, with the same answer, stated several different ways. “We don’t control AMCs. We don’t control fees. We don’t set turnaround times. Appraisers and lenders, figure it out ‘cause it’s not our problem.” (HUD FAQs - AMCs/Reasonable and Customary Fees/Turnaround Time)
|FHA - New Lender Net Worth Requirements & Streamlined Lender Approval Process - HUD Notice 10-070
There it is. The 3-year roadmap for FHA approved lenders and the official word that brokers can conduct business as usual until the end of the year. We will probably see a Mortgagee Letter on this shortly, but we are announcing it ahead of the Mortgagee Letter since HUD put it in writing. (New FHA Rules Strengthen Risk Management, April 5, 2010, Press release HUD No. 10-070.)
|FHA Notice to Lenders on FEMA Flood Insurance
While HUD’s notice states that as long as an application for flood insurance is in the file and the premium is paid they will insure the loan, many lenders aren’t allowing files to close because the flood insurance coverage isn’t currently available. It all adds up to quite the nightmare for the struggling housing market. (Like there wasn’t enough to deal with before.)
|FHA Issues Appraisal Update and/or Completion Report Form - ML 2010-13 (Effective 2-15-10)
This is all clarification of the original ML 2009-51, which announced FHAs acceptance of the Appraisal Update and/or Completion Report. It was nice to have the validity periods spelled out so we don’t assume that the 30 day extension we all take for granted is an option when an appraisal has been updated. Crucial detail indeed. [FHA Mortgagee Letter 2010-13, March 31, 2010, Appraisal Update and/or Completion Report (Fannie Mae Form 1004D/Freddie Mac Form 442/March 2005)]
|What the heck is HAMP (Home Affordable Modification Program) all about?
What is FHA HAMP all About April 2010|
To be clear from the start, the FHA Home Affordable Modification Program (FHA HAMP) is not a loan program that loan officers originate. It is a loss mitigation option used by loan servicers to help borrowers reduce their mortgage payment and avoid foreclosure. So why am I writing about it? Past clients who turn to you (and your real estate agents) first, may call you if they are having problems.
|FHA Changes Time Period for REO Appraisal Validity Period and Second Appraisals (Effective April 1, 2010)
Here’s the Catch 22 - You won’t know the date of the appraisal until you request a copy of the appraisal from the Management Company, which as the lender, you can’t do until you get the fully executed contract. Because the contract ratification date is your key, you could easily be closing AFTER the appraisal validity period has expired. But if HUD accepted the contract within that 120-day window you are fine with the existing appraisal. (FHA Mortgagee Letter 2010-08, March 8, 2010)
|HUD tells Loan Correspondents to “Hold Off” on their Audited Financial Statements
Many loan correspondents will get caught in a timing fiasco as they won\'t want to lose their ability to do FHA loans but will have to pay fees to retain an approval they won’t have much longer. Then they\'ll be scrambling to find a lender to accept them into the "fold" (which may still require audited financials) in order to continue originating FHA loans. Tough stuff and with no definitive dates yet, it’s really frustrating.
|FHA New Construction Document Requirements plus Cert. of Occupancy Equivalency Details – [Includes Chart: Requirements for Proposed, Under Construction and Existing, Less Than 1yr] (Effective February 2010)
Prior to an online webinar on new construction, FHA issued a consolidated list of documents required for new construction files. While none of the information is new, I thought you’d find the list a helpful resource. [Download Charts & Checklists]
|FHA 203K: The Process & The Players!
With the advent of the computer and lightening speed data processing, the 203K loan is now beginning to be perceived as a valuable tool that is “saving deals” every day. The 203K-streamline mortgage has made it even easier for people to do simple repairs along with purchasing a home. But, one of the key players, Bank of America, is making it more difficult than it needs to be!
|FHA Issues FAQs Related to ML 09-51 (Adoption of the Appraisal Update Report)
Know your investors before you try to avoid getting another appraisal on a file because of validity expiration. I doubt we’ll see the use of this form become very popular. (FAQs – ML 09-51 Adoption of the Appraisal Update Report)
|FHA Cleaning House with a Bigger Broom - Procedures for Terminating Underwriting Authority (ML 2010-03)
While the detail isn’t relevant to most of you, it’s good to understand the yardstick that’s being used to measure the quality of the loans you are originating, processing or underwriting. Your company, or the lender you broker to, may lose its ability to underwrite FHA loans. (Mortgagee Letter 2010-03, Mortgagee Approval for Single Family Programs – Extended Procedures for Terminating Underwriting Authority, January 21, 2010)
|FHA Increases in UFMIP - ML 2010-02 (Effective April 5, 2010)
As FHA works to build the insurance fund to a level that can sustain the current and future losses I, for one, am thrilled they chose this option as opposed to a down payment increase. Hopefully your origination software will be updated for the change but don’t count on it. (Mortgagee Letter 2010-02, Increase in Upfront Premiums for FHA Mortgage Insurance, January 21, 2010)
|FHA Delays Implementation of ML 2009-28 - Appraiser Independence and ML 2009-51 - Adoption of the Appraisal Update and/or Completion Report (Effective 2-15-2010)
There was no official “document” issued, so don’t waste your time looking for it. I have attached a copy of the email text in case you need it. Keep an eye on your investor’s policies regarding the appraisal update form so that you don’t end up with a loan that FHA will insure but your investor won’t buy. (HUD Letter RE: ML 2009-28 & MC 2009-51 – December 22, 2009)
|FHA Short Sales and Short Pay Offs - New Credit Policy - ML 2009-52 (Effective 12-16-2009)
While the language of this letter leads you to believe that a short sale would have to be a previous event to have impact on the current file, think again. What’s really scary is that you probably won’t know this until you have the HUD Settlement Statement from the sale of the home. You may want to make it a practice on purchase applications to ask borrowers, flat out, if they are selling their current primary residence as a short sale. (Mortgagee Letter 09-52, Short Sales and Short Payoffs, December 16, 2009.)
|FHA Issues FAQs on the New FHA Condominium Approval Process – ML 2009-46A & ML 2009-46B. [15-Page HUD FAQ Included]
15 pages of FAQs: Not much of the fog has lifted after reading it. These FAQs do say, “FHA will not provide a checklist.” So it’s up to each lender to decide how they will review the project to feel comfortable certifying to HUD that the project is still in compliance. The last 4-1/2 pages have some interesting facts about Site Condo’s. (FHA Mortgagee Letter 2009-46A & 2009-46B)
|FHA RESPA and FHA Related Policies - The 1% Origination Cap is Gone - ML 2009-53 (Effective January 1, 2010)
If RESPA changes are the final blow-- swaying you to consider a simpler career path, say neurosurgery or something, you are not alone. I have to vent for a minute…read my story…because this is how I envision your explaining the GFE to your borrowers will occur. (Mortgagee Letter 09-53, Real Estate Settlement Procedures Act (RESPA) and FHA Related Policies, December 30, 2009)
|FHA Adopts Appraisal Update and/or Completion Report (Fannie Mae Form 1004D / Freddie Mac Form 442) – ML 2009-51 (Effective January 1, 2010)
Folks at HUD are sleeping better at night knowing that once again they’ve “righted a potential wrong” and protected the consumer from harm. Well dream on people. Do not plan on ordering Appraisal Updates on your expired FHA appraisals until you know if your investors will accept them. Better to prepare your borrower for the cost of a second appraisal and disclose the higher cost up-front. (Adoption of the Appraisal Update and/or Completion Report (Fannie Mae Form 1004D / Freddie Mac Form 442), Mortgagee Letter 2009-51, December 7, 2009)
|FHA Gives Relief from Second Appraisal Requirements – ML 2009-48 (Effective 11-18-09)
Great news! Not often do we get told to lessen documentation requirements. This second appraisal was digging into your profits and processing time….so good riddance! But wait, you are required to order a 2nd appraisal if home is being resold with 91 to 180 days of purchase by the seller. (Second Appraisal Reporting Requirements Mortgagee Letter 2009-48, November 18, 2009)
|FHA Maximum Loan Limits for 2010 - ML 2009-50 (Effective January 1, 2010)
While reviewing this Mortgagee Letter, all I could think was “holy overlapping legislation!” My interpretation below is definitely the “boiled down” version. Print out the ML and take a look at the first two paragraphs. It’ll make your eyes cross. Many areas will have limits that are between the declared “floor and ceiling” which is why you need to go to the link and check your area limits. (2010 FHA Maximum Loan Limits, Mortgagee Letter 2009-50, November 25, 2009)
|FHA Condominium Approval Process – Final Rules with Temporary Exceptions [Includes 15-page FAQ Condo Approval Process]
This new comprehensive guideline is a huge reprint of Mortgagee Letter 2009-19 plus the new stuff. Use this new version as your guide and throw away 2009-19. Nothing has changed about the fact that after December 7, 2009, we will have to complete lender certifications on each loan that says that we checked for compliance with the current guidelines and the project passes muster. So basically, a project may be on the approved list, but it doesn’t automatically mean you can lend on it. (FHA Mortgagee Letter 2009-46A: Temporary Guidance for Condominium Policy & FHA Mortgagee Letter 2009-46B: Condominium Approval Process for Single Family Housing )
|FHA Offers Half-Price Homes! Good Neighbor Next Door - What a Deal! [Includes Mortgage Talking PointsTM flyer, Half-Price Homes! Good Neighbor Next Door - The Rare Gem.]
Good Neighbor Next Door (GNND) is the new name for an old program. Most of you may know it as Teacher Next Door or Officer Next Door. This is one of those programs that you may not work with a lot, but you should absolutely know about in order to be the well-rounded source of knowledge to your clients and realtors.
|FHA Approves More Non-Profits Deemed Worthy of Helping Homeowners
Gotta’ admit HUD has good timing on this one - just ahead of the expected extension of the Home Buyer Tax Credit and after they issued Mortgagee Letter 2009-15. But the elephant in the room hasn’t left. (Update on Eligibility Requirements for Nonprofit Instrumentalities of Government Seeking Placement on the Federal Housing Administration Nonprofit Organization Roster as Providers of Secondary Financing FHA Mortgage Letter 2009-38, October 8, 2009)
|FHA Mortgage Insurance Premiums (UFMIP) Remain Unchanged
FHA did announce, although very quietly, that the current moratorium on risk-based premiums that was supposed to expire on September 30, 2009, will continue. Be aware and know that our FHA MIP Reference Chart is still accurate.
|FHA Online Handbooks – Available Again
Back in May, FHA announced that it had posted the new online version of 4155.1 and 4155.2. The site worked for about 40 days and then went down. Anyway, just want you to know that if the FHA version goes down again, you have a backup.
|FHA New Streamline Refinance Worksheet - Your Complete One-Page Resource!
After writing about Mortgagee Letter 2009-32 “Revised Streamline Refinance Transactions" last month, I decided that a worksheet was in order. No more trying to remember what questions to ask. You will just grab this worksheet and go! For all Case Numbers on or after 11-17-09.
|FHA Flood Zone Requirements and Responsibilities of FHA Mortgagees & Appraisers
This ML is a reminder to lenders and appraisers of their responsibility to determine if a property is located in a Special Flood Hazard Area. With SO MANY new changes I know you are feeling overwhelmed this month, so I want to drop your panic level right from the start: NOTHING IN THIS ML IS NEW. (FHA Mortgagee Letter 2009-37)
|FHA Revised Eligibility Requirements for FHA Roster Appraisers (Effective October 1, 2009)
Do not count on HUD to be your safeguard against ordering an appraisal from a “non-certified” appraiser. If HUD doesn’t get them pulled off of the list right away and you order an appraisal from an ineligible appraiser you’ll get the pleasure of paying for a second appraisal. (FHA Mortgagee Letter 2009-36)
|FHA Revised Streamline Refinance Transaction (Effective November 17, 2009)
Your paycheck just got smaller! Let’s face it, this one hurts. And it’s a bummer that everybody’s got to lose out so that we could get the “churners” under control. But like everything else, it is what it is. Please carefully note the effective date on this! I have come across 4 different mortgage newsletter/blogs that have inaccurately stated the effective date for these changes. (FHA Mortgagee Letter 2009-32)
|FHA Strengths Risks - Ineligible Participants to HUD Program (Effective May 20, 2009) - Yes, HUD is playing catch-up here.
It’s a whole new world open to interpretation on what offenses or business practices may be considered an adverse reflection on your integrity, competence or fitness. Bottom line? Are you worthy enough to do FHA loans? One obscure rule included here: If you are creating your own advertising materials, be sure to clear them with management or your legal department and that “someone” is keeping them for the required two-year period. (FHA Mortgagee Letter 2009-31)
|FHA Appraisal Validity Period Changed to 120 Days (Effective January 1, 2010)
Declining property values are causing FHA to ‘batten down the hatches’ to protect themselves from future claims. Make no mistake, they do mean “all appraisals”. With appraisals expiring sooner it could mean a slight upswing in appraisal order volume, which would be good news for our appraisers. (Hey, I’m makin’ lemonade here guys…) (FHA Mortgagee Letter 2009-30)
|FHA Appraisal Assignment Rule From Lender to Lender - Appraisal Portability (Effective January 1, 2010)
This letter HUD specifically states that it’s NOT OKAY for lenders to order second appraisals just to get higher values or to ‘get around’ repairs. Duh!! I get calls all the time from Realtors whose buyers, after receiving a disappointing FHA appraisal, have been told by another lender, “Let me do the loan. We’ll order another appraisal.” Not any more! (FHA Mortgagee Letter 2009-29)
|FHAs Version of HVCC - Appraiser Independence (Effective January 1, 2010)
I swear when this ML was published I could hear the collective groan from the mortgage industry. At least with these requirements, and the advance warning, your company may have the opportunity to develop your own panel of approved appraisers for assignment rotation and not have to use an AMC. So, how is this different from HVCC? (FHA Mortgagee Letter 2009-28)
|FHA - Electronic Annual Certification to Replace Title II Yearly Verification Report (Effective Sept. 1, 2009)
Owners and managers, this announcement is all for you. Everybody else be sure that your owner/manager knows about it. The most important part of this ML is the attachment. It is a step-by-step walk through of the FHA Connection screens for completing this process. (Mortgagee Letter 2009-25, August 24, 2009)
|FHA Loan-To-Value Matrix (Includes FHA Maximum LTV Chart)
Wouldn\'t it be handy if you had an FHA LTV Matrix you could refer to? Purchase transactions and 4 different refi options outlined in this reference chart.
|FHA - The Deadline is Here! New FHA Appraiser Requirements (Effective October 1, 2009)
FHA fired the warning shot in December of last year when they issued Mortgagee Letter 2008-39 Revised Eligibility Requirements for FHA Roster Appraisers. Well, no new extensions have been issued and October 1 is staring us in the face so please take note or you WILL end up with an uninsurable loan along with a plethora of other potential nightmares.
|A Guide to FHA Loans & Non-Citizen FHA Borrowers - (Includes Samples/Pictures of Approved INS Forms.)
What if one or more of your borrowers are NOT US citizens? Can you still give them an FHA loan? If the borrowers are lawful residents….you bet! If they aren’t, you can’t. (And keep reading for a special snafu in community property states.)
|FHA Major Changes in the Condo Approval Process – Single Family Housing: Brace Yourself for Huge Impact On October 1, 2009!
Because FHA financing on condos will come to a screeching halt (December 7, 2009) for a period of time, it is imperative that Realtors understand the importance of moving those condo listings NOW. Get those buyers off the fence NOW. Who knows when the project will get back on the approved list? And spot loans are gone too! (FHA Mortgagee Letter 2009-19: Condominium Approval Process-Single Family Housing)
|FHA Closing Costs Paid by HUD - A Boost for 203(K) Loans and the Lenders Who Do Them (Effective June 9, 2009)
HUD is trying to “sweeten the pot” for lenders who are willing to do 203(k) loans on a HUD home. The argument could be made that the incentive isn’t high enough because of the extra work that goes into these loans, but it’s better than nothing. (Notice H 09-04 – Closing Costs Paid by the U.S. Department of Housing and Urban Development)
|FHA Enhances Energy Efficient Mortgages - Now is the time to Go Green! (Includes Energy Efficient Mortgage Worksheet.)
Looking for new business? Go Green! Borrowers can add the cost of energy efficient improvements to their purchase or refinance loan--the idea being; if the home is more energy efficient the borrower will save money on utilities that could be used towards the home’s monthly mortgage payment. (FHA Mortgagee Letter 2009-18: Energy Efficient Mortgages - Increase in the Dollar Amount of Energy Efficient Improvements)
|FHA Using First Time Homebuyer Tax Credits
FHA’s ML 2009-15 is not going to deliver us from down payment hell. It does not provide an easy, simple solution to get the $8,000 tax credit into the hands of our buyers before closing and the problem is money…or rather the lack thereof. (Includes - IRS First-time Homebuyer Credit Overview.) (FHA Mortgagee Letter 2009-15, May 29, 2009)
|FHA Manufactured Housing Policy Guidance - Consolidated Property and Underwriting Eligibility (Effective 8-21-09)
If you work with manufactured housing loans, FHA has combined all of the current requirements, including the new HERA changes, into ML 2009-16 as the new consolidated resource. It is a good comprehensive overview and has great worksheets for maximum mortgage amounts, which gets tricky on new construction. (FHA Mortgagee Letter 2009-16, May 21, 2009)
|New FHA Online Handbooks - What You Need to Know & Tips on How to Use
Yep, there are 2 versions out there! The reason to care is that both versions are updated but they work in very different ways (however neither one is perfect.)
|Accuracy of Lender Data for FHA-Approved Mortgagees - (Includes Chapter 6 Handbook 4060.1 REV 2 - FHA Connection)
This is a “get your poop in a group” warning to prevent problems and delays when you go to process your next annual renewal. Owners and managers, this one’s for you. (Mortgagee Letter 2009-17, May 22, 2009)
|Extension of Property Flipping Waiver of Mortgagee "Acquired" and Foreclosed Homes. (Effective 5-15-2009)
There is actually a long list of properties that are exempt from the 90 day holding period and I figured now was a good time to give you a friendly reminder. This is a great dealmaker that many RE Agents are not aware of.
|FHA Releases Online Versions of FHA Handbooks 4155.1 (Mortgage Credit Analysis) and 4155.2 (Guide to Single Family Mortgage Insurance Processing) - (Effective April 9, 2009)
It’s about time—but there’s a WARNING: The new handbooks incorporate changes from mortgagee letters through 12/08. But for now, be aware that as of May 7, 2009 the “trial” version of the handbook has not been updated to reflect 2009 changes. (FHA Mortgagee Letter 2009-14, April 9, 2009)
|FHA Foreclosure Fix-Ups & 203k Streamlines - Is it a good fit for your business?
I want to be clear from the start. I am a huge advocate of the 203K FHA Streamline program and have seen firsthand how well it can work. It can be a fantastic niche to advertise to Realtors, IF it’s a good fit for the originator and the client. This program allows you to add up to $35,000 to their loan amount.
|FHA Market Condition Addendum (1004MC) to Determine Declining Markets. Mortgage Talking PointsTM flyer "What the New Market Condition Appraisal is All About" (Effective April 1, 2009)
For FHA purposes, the MC Addendum findings determine whether or not the property is in a declining market. Additional time is required to complete this form and most appraisers are going to raise their fees. The appraisers I’ve talked to are saying an additional $50-$75. You will need to re-disclose! (FHA Mortgagee Letter 2009-09, March 23, 2009)
|FHA Limits - Cash-out Refinance - 85% Maximum LTV is back! (Effective April 1, 2009)
Wave goodbye…they’re really gone. No more 95% cash-out refis. A quick note on 3 and 4 unit properties: An 85% loan amount may not be allowable if the new payment doesn’t pass the self-sufficiency test. (FHA Mortgagee Letter 2009-08, March 12, 2009)
|FHA Re-Establishes Monitoring of Mortgagees (SWAT) (Effective April 2, 2009)
HUD establishes a SWAT team to monitor excessive defaults (by lender). Is your Quality Control Plan up to date? We hope HUD will continue to put some punch behind their policies so that the bad apple lenders don’t take us all down. (FHA Mortgage Letter 2009-12, April 2, 2009)
|FHA Loan Limits for 2009 - Back to Where We Started - With a Big Kicker for HECMs! (Effective 1-1-09 to 12-31-09)
Higher limits are great news. However, the process is a pain. It depends on the date the case number was issued and comparing which loan amounts were higher (2008 or 2009). And then there’s the HECM Loan Limits – HECM Loan Originators have gotta’ be dancin’ in the streets right now! (County Loan Limit Chart Included) (FHA Mortgagee Letter 2009-07, February 24, 2009)
|How to Become an FHA Approved Lender - Checklist Download
FHA is all the rage these days. Download How to Become an FHA Approved Lender Checklist for both full and mini-eagle approval.
|FHA Underwriting At-A-Glance: Handy Purchase Transaction Matrix Chart Included
Even if you do FHA loans every day, keep the FHA Underwriting Purchase Transaction Matrix handy. There may be some info you don’t recall off the top of your head. Specifically the stuff on 2-4 unit properties.
|The Complete FHA Streamlined Refinance Documentation, Submission & Underwriting Approval Worksheet (Current as of 2-1-09)
The most complete and current FHA Streamlined Worksheet has been updated in the Charts and Checklists section. Use this worksheet and make sure your files are done right the first time—with no delays! No more backtracking. No more forgotten key documents.
|FHA to Provide Education Flyers for Everyone - Getting the Word Out...Someday
FHA has designed flyers that will be specifically directed at prospective borrowers—but it’s not available just yet! Our subscribers to receive email notice the minute FHA makes their flyers available. Remember, MortgageCurrentcy.com has some great customizable Mortgage Talking Points® flyers designed for marketing FHA information to your Realtors. Take advantage! (FHA Mortgagee Letter 2009-02, January 7, 2009)
|FHA Allows High Loan-Limit Streamlined Refinances for 2009 - For Mortgages Originated Under 2008 Higher Loan Limits.
Great news! HUD has brought the 2008 high-limit “orphan” FHA loans back into the fold! These higher loan limit borrowers have so much to gain from lower interest rates right now. Not to mention the lenders who will originate their refinances. However, they must meet 2 rules! (HUD Announcement, January 16, 2009)
|Revised Policy for Annual FHA Renewal & Approval for Lenders
No bailout for slackers who don’t submit their annual renewal on time. The “easy way out” just got nixed. Read the new rule on filing your lender renewals--12 months without the ability to originate FHA loans is a big loss to your bottom line. (FHA Mortgagee Letter 2009-01, January 6, 2009)
|FHA Appraiser Roster: Revised Eligibility & Deadline Extended
Okay, so these new requirements are my appraiser\'s problem right? Oh but no. They\'ve made it your problem too. HUD will not be "cleaning" out its database of non-qualified appraisers for quite some time, so...the FHA appraiser that you assign an appraisal to on September 30, 2009 may create an uninsurable loan when you assign another appraisal to him on October 1, 2009. What\'s going to happen? (FHA Mortgagee Letter 2008-39, December 17, 2008)
|FHA Secure Has Been Terminated!
FHA has said that the reason for pulling the plug on FHASecure was because of the MMI Fund\'s inability to handle the negative impact of the program. The good news is that HUD reinstated and simplified the rate and term refi process...read more! (FHA Mortgagee Letter 2008-41, December 19, 2008)
|FHA Streamlined Refinances
FHA Streamlined Refinance is all the craze these days! Do you want to get these loans thru the system faster and close more loans?
|FHA Refinance & Streamline Transactions: Revised Maximum Mortgage Calculation - Just the Tip of the Iceberg (LTV Matrix Included)
Finally! With rates dropping and streamline refinances explosind it was about time for FHA to clarify their refinance maximum loan amount calculations! 85% cash-out refinances were NOT eliminated! Hey, now we need two appraisals. HUD created an easy-to-understand matrix - print it out. It\'s really good. (FHA Mortgagee Letter 2008-40, December 15, 2008)
|FHA Loans - Acceptable Down Payment Sources! (Mortgage Talking PointsTM Flyer - Shake the Money Tree)
There are lots of lesser-known alternative sources of down payment funds acceptable to FHA. Many loan officers, real estate agents and builders either don’t know about or fully understand them. You might be able to close a few more loans by knowing this info. Download Mortgage Talking Points® Flyer – Shake The Money Tree!
|FHA/VA: DU for Government Loans - Will Not be Updated Until 1/24/09 - It's Still Your Responsibility to Check Loan Amounts!
The oops potential for loan buy-backs and uninsured loans is massive to say the least. You cannot depend on your DU findings for government loan amounts until January 26, 2009. (Fannie Mae DE for Government Loans Release Notes for January 2009, on December 1, 2008)
|FHA - Property Flipping Allowed in 5 Midwestern States
If you are originating in these states, get the word out! Quick! This is big news for those doing business in these counties. Check your pipeline: deals that were not previously eligible for FHA financing may be now. See if your borrowers could benefit. (FHA Mortgagee Letter 2008-37, November 24, 2008)
|FHA HOPE for Homeowners' Program (H4H) - Is it Workable?
It looks like lipstick on a pig to me--none of these changes make a @*!#%! difference to most of us; H4H is STILL not a viable origination tool. With that said, there is still a lot of buzz going on and subscribers are asking about it, so here’s what you need to know, in plain English! (HUD News Release 08-178, November 19, 2008)
|FHA Reverse Mortgages & New Origination Fee Limits - How to Figure!
Now is the time to take a hard look at your company policy, if you have one, regarding HECM origination fees. Seems simple enough, but I hate it when HUD gives us instructions that are “open to interpretation” and they’ve done it again!! First, let me clarify a few things for you… (FHA Mortgagee Letter 2008-34, October 31, 2008)
|FHA Maximum Loan Limits Including Reverse Mortgage (HECM) Mortgage Loan Limits for 2009
Most of us are a little misty-eyed over loosing our temporary higher limits but hey, it could have been much worse...really. Create lists for your area and email or deliver them to everybody. Put the FHA limits for surrounding counties on the back of your business card and laminate. (FHA Mortgagee Letter 2008-36, November 7, 2008 & FHA Mortgagee Letter 2008-35, November 6, 2008)
|FHA - Maximum Mortgage Limits for 2009 - More Complicated Than You Think - Links To Loan Amount Tables Included
So, FHA has their own limits but they threw in a couple of "kinks" in the ML. Subscribers can download the new limits, but there\'s a lot more to it, for loan officers, processors and underwriters. Complete details to follow since it was just released on November 7, 2008. This is sooooo new! (FHA Mortgagee Letter 2008-36)
|Home Equity Conversion Mortgage (HECM) for Purchases - It's About Time We Heard Something!
This has been a long time coming for all of you HECM originators. The Housing Economic Recovery Act (HERA) has given the FHA HECM the higher loan limit of $417,000. This fast-growing product is headed for some off-the-charts popularity. Plus it will be the only game in town since Fannie’s Homekeeper is throwing in the towel as of December 31, 2008. (FHA Mortgagee Letter 2008-33, October 20, 2008)
|HOPE for Homeowners Origination Guidance - But Will it Help YOUR Clients?
While the hoopla over HOPE was great, the resulting guest list for the party is short and most of us didn’t get invited. The majority of investors, who we in the mortgage industry would be selling or brokering these loans to, have said, “After reviewing the program, HOPE for Homeowners will not be eligible for purchase from third party originators.” (FHA Mortgagee Letter 2008-09, October 1, 2008)
|FHA Incorporates Desk Top Underwriting - It's NOT as Automated as You Think - What to Expect!
This affects everyone! This can and will affect your paycheck. Remember the good ol’ days (2 years ago) when we could be lazy (at least I was) about looking up all those pesky guidelines. Heck, just run it through DU. It will tell you if it will fly and what you need for documentation. Well, that’s no longer the case because there are lots of things you need to check before you do so. (Fannie Mae document issued 10/1/2008: DU for Government Loans)
|Reverse Mortgage Rules Changed to Comply with HR3221.Sec 2122
HERA (HR3221) revamped the entire HECM product and this is just the beginning. The new ML doesn’t say much, yet it’s truly devastating to those who are amongst the non-FHA approved brokers who have been getting paid for “assisting” HECM borrowers. No ifs, ands, or buts – “but” – it’s over! HUD realized that the “cross-selling” matter is awfully complicated, so effectively; they are not doing anything yet. At least HUD is letting us know that there are no directives until the subject is researched. (FHA Mortgagee Letter 2008-24, September 16, 2008 - HR3221.Sec.2122(a)(9), Housing and Economic Recovery Act)
|Do You Know When Rental Income Can Be Used for Qualifying on an FHA Loan? Vacancy Chart Included.
No question, HUD acknowledged that the whole rule change is about individuals who may “provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage” [ML 08-25], who then walk away from the first home after closing on the second. Plain and simple – If your clients are purchasing a new home and renting the home that they currently live in, both payments must be included in the qualifying ratios. UNLESS, they fit into one of the exceptions. (FHA Mortgagee Letter 2008-25, September 19, 2008)
|Re-written Rule Changes: FHA-MIP, Non-Occupant Co-Borrowers, Non-Traditional Credit (Reference Charts Included)
ACKKK! The whole thing is so HUD-like. Let me explain. In the current ML (2008-22), HUD rescinds the entire ML 2008-16. Then, they "retain and reiterate" (give back) most of the same rules, yet there are quite a few technical differences. And we ALL know how technicalities make or break loans! (FHA Mortgagee Letter 2008-22, September 4, 2008)
|FHA's "Hope for Homeowners Program" Saves Homeowners from Foreclosure! Or - is FHASecure Better?
As far as I\'m concerned, it isn\'t even worth the paper it\'s written on. I\'d choose to ignore writing about it, but Washington keeps touting it and throwing it out for the world to see, saying it will be "the" program to save borrowers who are facing foreclosure. (HR3221.ENR. Division A - Title IV - HOPE FOR HOMEOWNERS)
|FHA Announces Easier Condo Guidelines
The Secretary of HUD will have discretion to revise the current condominium requirements under the new Section of the Act. I\'m not kidding, that\'s it! Apparently before, HUD was stuck with rigid rules mandated by Section 234 of the Act; NOW, Section 203(b) gives them much more control. So here we are, knowing NOTHING for sure. But everybody keeps asking about the new condo rules, and I DO know something... The following information came from Jim Beavers, Deputy Director of Single Family Development at HUD. (HR3221, Sec. 2117. Insurance of Condominiums. Housing and Economic Recovery Act.)
|Finally - Final Rule for FHA Mortgage Insurance Premiums! UFMIP, MIP Factors & Calculations AFTER 10-1-08
It\'s about time! It\'s quite a relief that the new UFMIP is a lot lower than it was expected to be! I think that 1.75 is a number that everyone can live with. The fun is going to be dealing with all of the various MIP factors and methods of calculations - and getting it right! Reference Chart Included. (HUD Federal Register "Notice"; Docket No. FR-5171-N-03, 8-24-2008)
|FHA Cash Investment & Down Payment LTV Changing. Refi LTVs Too - Encourage Clients - Act Now!
We’ve all been waiting for this because new loan amount calculations were “supposed” to be effective 10-1-08, and thank goodness they’re not. But still, the news is still incredible! I’ve never actually seen HUD really and truly “simplify” anything, let alone the loan amount calculations. They’ve actually done it this time! And then, the refinance calculations are a shocker! There’s a bunch more, so let me go over things one at a time. (FHA Mortgagee Letter 2008-23, June 11, 2008)
|FHA Maximum Loan Limits - 2009 & Beyond
There’s no question that it will hurt to lose the $729,750 that we’ve enjoyed from the Economic Stimulus Package. But look at the whole picture and the new ceiling is fantastic news. Without this legislation, maximum FHA’s ceiling would revert to $362,790 at the end of the year! $625,200 doesn’t sound so bad any more, does it? (H.R.3221.ENR Sec.2112.MAXIMUM PRINCIPAL LOAN OBLIGATION)
|What is FHA's New Down Payment, and What About the CLTV?
Thank goodness the previous distinction in LTVs for high and low closing costs states is finally gone! It was silly from the onset. Moreover, according to *HUD, all tiered pricing is out the door. Sounds great to me. (H.R.3221.ENR Sec.2113.CASH INVESTMENT REQUIREMENT; 2112.MAXIMUM PRINCIPAL LOAN OBLIGATION)
|FHA - CAIVRS Telephoned Access to be Discontinued!
ANY time that you have a potential FHA borrower, you should check CAIVRS. It can be a deal-breaker, and you need to know right up front! If you are counting on your Processor to deal with it, you may want to make sure you get the file to him/her instead of keeping it in your possession. (FHA Mortgagee Letter 2008-18)
|The Inside Scoop on What's Happening with FHA MIP - ON HOLD!
Can you imagine the millions of dollars spent in implementing the changes with LP, DU, Lenders, LOS vendors, training involved, etc., only to be told everything must change again? Okay, it is a fact that the new mortgage insurance won\'t be risk based. We also know that the previously legislated maximum UFMIP was 2.25% and that the new maximum UFMIP is 3.0%. As to what the new UFMIP will actually be, we flat out don\'t know. It will be 3% or less. Risk Based MIP Chart Included. (H.R.3221.ENR Sec.2133.MORATORIUM ON IMPLEMENTATION OF RISK-BASED PREMIUMS)
|Seller Assisted Down Payment Assisted Programs Terminated; Use Family Member Loans (Mortgage Talking PointsTM Flyer/Email Included)
I realize that many of you have been dependent upon DPAs for a majority of your FHA business. At the same time, DPAs foreclose at a much higher rate, and are causing concern for the stability of the FHA mortgage insurance fund. For now, however, it\'s a moot point what you or I think of DPAs; they are gone as of 10-1-08. And I can show you other alternatives! (H.R.3221.ENR Sec.2113.PROHIBITION OF SELLER-FUNDED DOWN PAYMENT ASSISTANCE)
|The Final Word from HUD About Non-FHA Approved Brokers
HUD finally broke down and admitted that there is an actual law that allows non FHA-approved brokers to "assist" with FHA loans! Read what HUD finally has to say, with real answers and precise instructions. Non FHA-Approved Brokers - The Final Word from FHA(FHA Mortgagee Letter 2008-17, June 20, 2008)
|The Real Scoop on HUD's Flipping Rule & 90 Day Holding Period Waivers
I can\'t believe all of the mis-information and hoopla this is causing. Rumblings all over assert that FHA\'s entire 90-day ownership period was totally waived, and it is SO not true. Lenders are acquiring properties by negotiating a deed-in-lieu rather than foreclosing. This means that the waiver applies to foreclosures, deeds-in-lieu, and any other means that a "mortgagee" may use to acquire the property from the owner. Property Flipping 90-day Rule Change - The Real Information(Waiver of Requirements of 24CFR 203.38a(b)(2), June 9, 2008)
|Now - the Whole Story about FHA Risk Based Pricing, MIP, UFMIP, LTV and Credit Scores: Includes Great MIP Reference Chart
Last month I reported on FHA\'s new risk based mortgage insurance premiums per the Federal Register Notice. Knowing how karma works, FHA wrote a much more comprehensive Mortgagee Letter the day after it was published. To keep the information all in one place, I took the original text from last month and incorporated all of the new data throughout. I also did a handy-dandy, quick reference chart free to subscribers. Risk Based Mortgage Insurance, The Comprehensive Story(FHA Mortgagee Letter 2008-16, June 11, 2008)
|FHA Streamlined Refinances - Revised MIP and UFMIP rules - and Can't Streamline FHA Secure?
Can MIP premiums get any more complicated? Subscribers can download all of the new rules on a one-page Risk Based Premium Reference Chart. Print and keep it handy because it will instantly help you when meeting with clients. Streamlined Refinances, MIP and More(FHA Mortgagee Letter 2008-16, June 11, 2008)
|Part Two: FHA Cash-Out, No Cash-Out, Rate and Term, Refinance Saga Continues
Aghhh! Did I say that you can\'t squeeze blood from a turnip? If you go back to the questions from last month\'s “FHA No cash-Out, What Has Happened to this Program?” I don’t have all the answers. But I have a few, along with some new twists. The ability to add a non-occupant co-borrower to any 85% cash-out transaction is fantastic! Use it! Part II, FHA Refinance Saga(FHA 2008-13, May 7, 2008)
|FHA Rules Does Away with Down Payment Assistance Programs, May be Gone for Good!
Did you notice that 1/3 of all FHA buyers\' down payments were funded by a DAP in 2006? For the first five months of 2008, the percentage is over 37%. The question is whether or not elimination of DAPs will eliminate 37% (or so) of the FHA purchases? Ouch! If you are involved in FHA purchase transactions, this will impact your business. Make your comments (www.Regulations.gov) and pass the word. DownPayment Assistance Programs(Federal Register: June 16, 2008 (Volume 73, Number 116) Standards for Mortgagor\'s Investment in Mortgaged Property)
|FHA Cash-Out Refinance, 95% LTV and 85% LTV Rules
The biggest thing to come out of this is the dis-allowance of non-occupant co-borrowers. They WERE previously allowed on 85% LTV cash-outs. This upsets me terribly, but realistically, hardly anybody knew you could do them to begin with. (See related handbook: FHA & VA Streamlined Refinance Handbook) Cash-Out Refi Changes & Clarifications(Mortgagee Letter 2008-13, May 7, 2008)
|New MCAW! Comes New FHA/VA Addendum to 1003 - and - New Learning Curve
Oh goodie, all of your software\'s going to change! There will definitely be a learning curve. But it WILL be worth it because the new MCAW is SO much better than the old one! But you\'d be well advised to read what you are attesting to. New! Easier MCAW, Revised Addendum(Mortgagee Letter 2008-15, May 22, 2008)
|FHA Secure - SO Much More: Includes Rule Changes for FHA Chas-Out, FHA No Cash-Out, FHA Manual Underwriting
This is complicated and there\'s a lot more to it than meets the eye. The title implies that it only deals with FHA Secure, but that\'s NOT TRUE! It changes the rules for ALL FHA refinances except for Streamline Refi\'s. FHASecure - SO MUCH more than it appears(Mortgagee Letter 2008-13, May 7, 2008)
|Intro of Risk Based MIP and UFMIP - Credit Scores and LTV Decide!
I\'m in total shock! FHA just made it a RULE that all loans (that have credit scores) MUST be submitted to TOTAL! In order to calculate the UFMIP or the maximum loan amount, the credit score must be obtained from the AUS. Risk Based MIP Brings NEW Glitches(Federal Register / Vo. 73, No 93 / Tuesday, May 13, 2008 / Notices)
|Are There Loopholes for Non-FHA Approved to Originate FHA? To do HECM Loans?
The only way that I can see around this is by having a contract with the lender wherein all parties agree to the lender providing you with all information regarding the loan\'s status. They are using any method possible to encourage the origination of FHA HECMs. After all, this IS a great program, and it also looks great for HUD politically! Non-FHA Approved Mortgage Brokers - HECM or Everyone? (Mortgagee Letter 2008-14, May 16, 2008)
|HECM (Reverse Mortgage) Counseling Fee Allowed
Housing Agencies that are approved to provide counseling services for HECM borrowers or their families may now charge a fee for their services. And yes, it does matter if you are involved in HECM originations because there will be another charge to (most of) your clients - whom are elderly with limited income. Fee Allowed for HECM Counseling Services(Mortgagee Letter 2008-12, May 6, 2008)
|FHA No Cash-Out Refinance, Conventional-to-FHA Gone? How to Deal with Changes
I recommend getting a case number on everything that you have pending before 7-14-08. Being able to subordinate an existing lien when the CLTV exceeds the statutory limits is excellent news! "Did FHA really mean that all conventional-to-FHA "co cash-out" mortgages must move to the FHASecure Program? (Unfortunately, I think they did.) I recommend getting a case number on everything that you have pending before 7-14-08." FHA No Cash Out, What has Happened to This Program?(Mortgagee Letter 2008-13, May 7, 2008)
|Good News! FHA Finally Defines Non-Traditional Credit Requirements
FHA finally came up with guidelines for non-traditional credit! DE Underwriters have been all over the place about what is allowed, and smart originators/brokers shopped underwriters for this reason alone!
|FHA Jumbo: Cash-Out Refinance LTV Reduced/Two Appraisals in Declining Markets
You have to admit that a 95% cash-out refi on a jumbo loan was too good to be true. You know, an 85% cash-out FHA-Jumbo is still an awesome loan. It allows: 1-4 unit properties; 1-unit homes only (not 2-4s), you can include a non-occupant co-mortgager to help with qualifying (but not to overcome bad credit). Fannie doesn\'t even have jumbo cash-out refis; and Freddie-jumbos are only 75% LTV with all kinds of fees and a 720 FICO. There\'s still no comparison.
|HECM (Reverse Mortgages) Offer Fixed Rate
If you originate HECMs - I\'m kind of excited about this. I got my own Mother into a HECM. Now I want to check into her changing options and getting a fixed interest rate, which wasn\'t, to my chagrin, available when she took out her loan. For those of you who don\'t currently originate HECMs - With the aging of America, the HECM is the fastest growing program out there. It\'s a great opportunity to develop a niche, and there is plenty of room for "experts" in this field.
|FHA Jumbos - The Greatest Loan on Earth!
This FHA happening is the biggie of the decade!! Honestly! FHA went from 2% of the overall mortgage market share in the country to 90% of the market’s demand overnight. Although I provided a brief review in the March MortgageCurrentcy.com, the following is much more comprehensive:
|Door Opened for Non FHA-Approved Brokers and Originators
Everyone is always looking for a way to get around the rules; I think it\'s human nature. The following is for those of you who are not-FHA-approved in a market in which FHA is one of the few viable loans left. You can\'t just idly stand by watching everyone else get all of the business, can you? However, HUD left a teensy-weensy door opening for non-approved brokers to squeeze into.
|Temporary FHA Loan Limit Increase!
|"What is the 203K Streamlined all About and Why Should I Look Into Doing These Types of Loans? Learn how a typical transaction works."
|FHA Defines the Use of 1099's and W-2's for Loan Originators. (Link to Reference Source for Proof.)
|How to Increase FHA Loan Limits in Your Area of the Country.
|FHA - HUD Policy Alert - RESPA and non FHA-Approved Brokers or Originators