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This is an article that appeared in the Rocky Mountain News over the weekend. If you or anyone you know is having problems making mortgage payments give us a call. We are offering the FHA Secure loans. In addition, we would be happy to consultant with you or your clients.
THREE PROGRAMS TO HELP AVOID HOME FORECLOSURES
Having trouble paying your mortgage? The public and private sectors keep coming up with foreclosure prevention programs, and Fed Chairman Ben Bernanke has urged them to devise even more.
Not two programs are alike and the rules keep changing. Here are three major programs.
1. FHA Secure Overseer: FHA
Summary: Replaces a non-FHA loan with an FHA-insured loan.
Eligible homes: Must be your primary residence.
Your existing loan: Must be an adjustable-rate mortgage and not FHA-insured.
Payment status: Can be current or delinquent.
Whom to contact: Your loan servicer or any FHA –approved lender.
2. Hope for Homeowners Sponsor: FHA, FDIC, Treasury Department and Federal Reserve.
Summary: Replaces existing mortgage with ne 30 or 40 year fixed rate mortgage insured by FHA.
Eligible homes: Must be primary residence.
Your existing loan: Must have been originated on or before Jan. 1, 2008. You cannot pay it without help.
Payment status: Current or delinquent.
Whom to contact: Your loan servicer.
3. Hope Now Alliance.
Summary: Trims payments.
Eligible homes: Primary residence.
Your existing loan: Must be owned or guaranteed by Fannie Mae or Freddie Mac or held by a Hope Now Alliance member.
Payment status: Must be at least 90 days delinquent.
Whom to contact: Loan servicer or Hope Now Alliance, hope now.com or (888) 995-4673.
If you or anyone you know is having problems making mortgage payments give us a call. We are offering the FHA Secure loans. In addition, we would be happy to consultant with you or your clients.
Having trouble paying your mortgage? The public and private sectors keep coming up with foreclosure prevention programs, and Fed Chairman Ben Bernanke has urged them to devise even more.
Not two programs are alike and the rules keep changing. Here are three major programs.
1. FHA Secure Overseer: FHA
Summary: Replaces a non-FHA loan with an FHA-insured loan.
Eligible homes: Must be your primary residence.
Your existing loan: Must be an adjustable-rate mortgage and not FHA-insured.
Payment status: Can be current or delinquent.
Whom to contact: Your loan servicer or any FHA –approved lender.
2. Hope for Homeowners Sponsor: FHA, FDIC, Treasury Department and Federal Reserve.
Summary: Replaces existing mortgage with ne 30 or 40 year fixed rate mortgage insured by FHA.
Eligible homes: Must be primary residence.
Your existing loan: Must have been originated on or before Jan. 1, 2008. You cannot pay it without help.
Payment status: Current or delinquent.
Whom to contact: Your loan servicer.
3. Hope Now Alliance.
Summary: Trims payments.
Eligible homes: Primary residence.
Your existing loan: Must be owned or guaranteed by Fannie Mae or Freddie Mac or held by a Hope Now Alliance member.
Payment status: Must be at least 90 days delinquent.
Whom to contact: Loan servicer or Hope Now Alliance, hope now.com or (888) 995-4673.
Jerry Frunzi Billie Campbell
Loan Officer Loan Officer
303-507-4933 303-570-2634
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1. What are the new single family FHA loan limits?
The Housing and Economic Reform Act (HERA) increases the loan limit for FHA mortgage insurance for single family, one unit properties (with increased limits for other single family properties up to four units) to 115 percent of the local area median home price, as determined by HUD (but no lower than a floor of 65 percent of $417,000 that is $271,050) or up to a cap of 150 percent of the GSE limit of $417,000, or $625,500. Note that the limits for the new Hope for Homeowners Program differ, see #12.
2. When do the new FHA single family loan limits become effective?
The new FHA loan limits go into effect after the limits in the Economic Stimulus Act expire on December 31, 2008, i.e., January 1, 2009.
3. Does this new law prohibit risk-based premiums?
Only temporarily. It prohibits HUD from taking any action to implement or carry out a risk-based premium program for a period of twelve months beginning on October 1, 2008.
4. Do lenders have to stop using risk-based premiums immediately?
No. FHA will insure loans using risk-based premiums through September 30, 2008.
5. What is the new cash investment requirement?
Borrowers must pay, in cash or its equivalent, 3.5% of the appraised value of the property. This means that borrower must provide a 3.5% down payment on purchase money mortgages. Borrowers must come to the closing table with 3.5% cash or equity in a refinance transaction. Borrowers can no longer accept seller-funded down payments (see below)
6. When does this new cash investment requirement take effect?
It is unclear at this time. Currently, FHA indicates that while the provision appears to be self implementing as of the date of enactment, under case law, the effective date is dependent on issuance of FHA guidance.
7. Does HERA prohibit seller-funded down payment assistance and if so what is the effective date of the new prohibition?
HERA prohibits seller-paid down payment assistance although it does permit such assistance from family members. The prohibition against seller-funded down payment assistance applies to those loans for which the lender has issued credit approval for the borrower on or after October 1, 2008. This means that if a lender issues credit approval before October 1, 2008, seller funded down payment assistance is permissible.
8. How is credit approval being defined?
Credit approval is defined for loans scored through FHA’s Mortgage Scorecard TOTAL as Accept/Approve on or after October 1, 2008. For those loans manually underwritten, credit approval is defined as the date the Direct Endorsement Underwriter approves the loan, as indicated by the DE signature on the Mortgage Credit Analysis Worksheet (MCAW) or Loan Transmittal form.
9. What if the credit was approved prior to October 1, 2008 but the loan closes after October 1, 2008? Is it eligible for insurance?
Yes, so long as the credit was approved before October 1, the loan is insurable.
10. Can municipalities and other government agencies continue to offer down payment assistance after October 1?
Yes, provided that the assistance is in the form of a second lien. There is no CLTV limit,, where a second is provided by a government agency.
11. What is the new Hope for Homeowners program?
A new FHA refinance program with an additional $300 billion in FHA mortgage insurance authority. Under the program, borrowers unable to afford their existing mortgages and who meet other criteria, can refinance into an FHA loan. Existing note holders who volunteer to participate agree to accept short pay-offs by writing down principal to 90% of the appraised value of the property. Loans will be eligible for securitization with Ginnie Mae. The program is voluntary on the part of lienholders.
12. What are the outlines of the new “H for H” program? These are some of the basics according to HERA:
• Reps and Warrants:
Insurance benefits will not be paid if a mortgage violates the representations and warranties the program’s governing body (Board) will require or if a borrower of the new loan fails to make the first payment on the FHA loan.
• Eligibility:
Mortgages eligible for refinance must have been originated on or before January 1, 2008. Borrowers must have housing debt-to-income ratios greater than 31 percent (or a higher ratio set by the Board) as of March 1, 2008. Borrowers must certify they did not intentionally default on the original mortgage or other debts or furnish false information (five year jail time for false statements) to obtain the FHA loan. Borrowers are not eligible if convicted of fraud within the last 10 years. Borrowers’ income must be fully documented through their two most recent tax returns and other standards established by the program’s governing Board or HUD. Eligible borrowers may only have one primary residence.
• New Loan Requirements:
30-year fixed rate loan not exceeding 90 percent of the property’s appraised value. Principal amount cannot exceed 132 percent of the 2007 Freddie Mac loan limits (i.e., $550,440). Board shall establish a reasonable limitation on origination fees. Prohibits junior liens for five years.
• Write-Down:
Participating note holders must agree to a reduction in principal to achieve the 90 percent loan-to-value requirement. Prepayment penalties and fees related to default or delinquency must also be waived.
• Premiums:
Note holder must pay the three percent upfront premium from the proceeds of the refinance. Borrower pays 1.5 percent premium annually.
• Shared Appreciation and Equity:
Borrower must share newly created equity with FHA when the property is sold or the loan is refinanced. FHA’s share in the equity is reduced from 100 percent to 50 percent in 10 percent increments over first five years. After five years, the homeowner and government each will share in 50 percent of the equity. Borrowers must also share any future appreciation 50/50 with FHA upon the sale of the property. The program’s governing Board will establish standards for sharing future appreciation owed to HUD with subordinate lien holders.
• Sunset: The program runs from October 1, 2008 through September 30, 2011.
• Servicer Liability: Amends the Truth in Lending Act (TILA) to create a fiduciary duty for mortgage servicers to “maximize the net present value of the pooled mortgages in an investment to all investors and parties having a direct or indirect interest.” The duty does not supersede servicing contracts. It also would deem servicers to act in the best interests of all investors if the servicer implements a refinance or modifies a loan through the HOPE for Homeowners plan.
Jerry Frunzi
O: 303.507.4933 F: 303.379.5835 Colorado Processing Center: 303.507.4933
jfrunzi@waterstonemortgage.com www.waterstonemortgage.com
1. What are the new single family FHA loan limits?
The Housing and Economic Reform Act (HERA) increases the loan limit for FHA mortgage insurance for single family, one unit properties (with increased limits for other single family properties up to four units) to 115 percent of the local area median home price, as determined by HUD (but no lower than a floor of 65 percent of $417,000 that is $271,050) or up to a cap of 150 percent of the GSE limit of $417,000, or $625,500. Note that the limits for the new Hope for Homeowners Program differ, see #12.
2. When do the new FHA single family loan limits become effective?
The new FHA loan limits go into effect after the limits in the Economic Stimulus Act expire on December 31, 2008, i.e., January 1, 2009.
3. Does this new law prohibit risk-based premiums?
Only temporarily. It prohibits HUD from taking any action to implement or carry out a risk-based premium program for a period of twelve months beginning on October 1, 2008.
4. Do lenders have to stop using risk-based premiums immediately?
No. FHA will insure loans using risk-based premiums through September 30, 2008.
5. What is the new cash investment requirement?
Borrowers must pay, in cash or its equivalent, 3.5% of the appraised value of the property. This means that borrower must provide a 3.5% down payment on purchase money mortgages. Borrowers must come to the closing table with 3.5% cash or equity in a refinance transaction. Borrowers can no longer accept seller-funded down payments (see below)
6. When does this new cash investment requirement take effect?
It is unclear at this time. Currently, FHA indicates that while the provision appears to be self implementing as of the date of enactment, under case law, the effective date is dependent on issuance of FHA guidance.
7. Does HERA prohibit seller-funded down payment assistance and if so what is the effective date of the new prohibition?
HERA prohibits seller-paid down payment assistance although it does permit such assistance from family members. The prohibition against seller-funded down payment assistance applies to those loans for which the lender has issued credit approval for the borrower on or after October 1, 2008. This means that if a lender issues credit approval before October 1, 2008, seller funded down payment assistance is permissible.
8. How is credit approval being defined?
Credit approval is defined for loans scored through FHA’s Mortgage Scorecard TOTAL as Accept/Approve on or after October 1, 2008. For those loans manually underwritten, credit approval is defined as the date the Direct Endorsement Underwriter approves the loan, as indicated by the DE signature on the Mortgage Credit Analysis Worksheet (MCAW) or Loan Transmittal form.
9. What if the credit was approved prior to October 1, 2008 but the loan closes after October 1, 2008? Is it eligible for insurance?
Yes, so long as the credit was approved before October 1, the loan is insurable.
10. Can municipalities and other government agencies continue to offer down payment assistance after October 1?
Yes, provided that the assistance is in the form of a second lien. There is no CLTV limit,, where a second is provided by a government agency.
11. What is the new Hope for Homeowners program?
A new FHA refinance program with an additional $300 billion in FHA mortgage insurance authority. Under the program, borrowers unable to afford their existing mortgages and who meet other criteria, can refinance into an FHA loan. Existing note holders who volunteer to participate agree to accept short pay-offs by writing down principal to 90% of the appraised value of the property. Loans will be eligible for securitization with Ginnie Mae. The program is voluntary on the part of lienholders.
12. What are the outlines of the new “H for H” program? These are some of the basics according to HERA:
• Reps and Warrants:
Insurance benefits will not be paid if a mortgage violates the representations and warranties the program’s governing body (Board) will require or if a borrower of the new loan fails to make the first payment on the FHA loan.
• Eligibility:
Mortgages eligible for refinance must have been originated on or before January 1, 2008. Borrowers must have housing debt-to-income ratios greater than 31 percent (or a higher ratio set by the Board) as of March 1, 2008. Borrowers must certify they did not intentionally default on the original mortgage or other debts or furnish false information (five year jail time for false statements) to obtain the FHA loan. Borrowers are not eligible if convicted of fraud within the last 10 years. Borrowers’ income must be fully documented through their two most recent tax returns and other standards established by the program’s governing Board or HUD. Eligible borrowers may only have one primary residence.
• New Loan Requirements:
30-year fixed rate loan not exceeding 90 percent of the property’s appraised value. Principal amount cannot exceed 132 percent of the 2007 Freddie Mac loan limits (i.e., $550,440). Board shall establish a reasonable limitation on origination fees. Prohibits junior liens for five years.
• Write-Down:
Participating note holders must agree to a reduction in principal to achieve the 90 percent loan-to-value requirement. Prepayment penalties and fees related to default or delinquency must also be waived.
• Premiums:
Note holder must pay the three percent upfront premium from the proceeds of the refinance. Borrower pays 1.5 percent premium annually.
• Shared Appreciation and Equity:
Borrower must share newly created equity with FHA when the property is sold or the loan is refinanced. FHA’s share in the equity is reduced from 100 percent to 50 percent in 10 percent increments over first five years. After five years, the homeowner and government each will share in 50 percent of the equity. Borrowers must also share any future appreciation 50/50 with FHA upon the sale of the property. The program’s governing Board will establish standards for sharing future appreciation owed to HUD with subordinate lien holders.• Sunset: The program runs from October 1, 2008 through September 30, 2011.
• Servicer Liability: Amends the Truth in Lending Act (TILA) to create a fiduciary duty for mortgage servicers to “maximize the net present value of the pooled mortgages in an investment to all investors and parties having a direct or indirect interest.” The duty does not supersede servicing contracts. It also would deem servicers to act in the best interests of all investors if the servicer implements a refinance or modifies a loan through the HOPE for Homeowners plan.
Jerry FrunziO: 303.507.4933 F: 303.379.5835 Colorado Processing Center: 303.507.4933jfrunzi@waterstonemortgage.com www.waterstonemortgage.com
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Help buyers create equity
The 203K Answer
The answer to buying a home that needs repair. FHA 203K program.
When working with buyers in this market, the real estate agent is asked questions about are prices going to continue to drop.
One solution may be to help the buyer purchase a house that needs repair, where they can obtain equity in the house by using renovation lending.
A buyer can purchase a fixer-upper with the low down payment of FHA.
The steps
Find house
Contract based on the” as is condition”
Contract contingent upon 203K program loan
Bids for work
Consult lender about streamlined or standard
Streamlined-Repairs below $35,000 and no structural changes. Consult with lender to determine if work meets standard or streamlined program
Standard –Minimum of $5,000 and could include structural changes. No maximum amount toward repair. Only limit is county maximum FHA Loan
Standard needs an FHA approved consultant.
For more information and rates on FHA203K contact us
Jerry Frunzi Billie Campbell
Email: jfrunzi@aol.com Email: billiewaterstone@aol.com
Cell: 303-507-4933 Cell: 303-570-2634
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Current owner must be on title for the last 90 days
Purchase agreement cannot be dated before day
91
Some lenders may require 2 appraisals
HUD REO’s
Exemptions to the Rule:
Owned by federal, state or local Government
Inherited Properties
Foreclosed or Mortgagee acquired properties
GSE owned – Fannie Mae or Freddie Mac
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In response to the passing of HR 3221, this update announces FHA’s new Mortgage Insurance Premiums for the period of October 1st, 2008 through September 30th, 2009. FHA’s Risk Based Premiums that went into effect on July 14th, 2008 will be on hold till October 1st, 2009.
Here are the 6 things you need to know about these changes…
1. Upfront Mortgage Insurance Premiums:
A. Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75 %
B. Streamline Refinances (all types) = 1.50 %
C. FHASecure (Delinquent Mortgagors) = 3.00 %
2. Monthly Mortgage Insurance Premiums:
A. For 30 year loans with LTV > 95 %, monthly will be .55%
B. For 30 year loans with LTV < 95%, monthly will be .50%
C. For 15 year loans with LTV > 90%, monthly will be .25%
D. For 15 year loans with LTV < 90%, monthly will not be required
E. For FHA Secure loans with LTV > 95%, monthly will be .55%
F. For FHA Secure loans with LTV < 95%, monthly will be .50%
3. Mortgages with FHA case number assignments made on July 14,2008, through and including September 30,2008, shall maintain the risk-based premium structure for the life of the mortgage
4. FHA will issue another notice that will formally advise when the moratorium is concluded and the premium pricing structure tnat should be followed once the moratorium ends
5. Credit Scores
A. Borrowers with credit scores below 500 will require an LTV of 90% or less
B. Borrowers with 3 scores, the middle score is used
C. Borrowers with 2 scores, the lowest score is used
6. These premium changes apply to the folllowing FHA loan programs: 203b (standard 1-4 unit property), 203k (rehab loan), and 234c (condominiums) and do not apply to FHA reverse mortgages
We are still awaiting more changes in response to HR 3221 so watch for future updates.
For more information contact Jerry Frunzi jfrunzi@aol.com
Billie Campbell billiewaterston@aol.com
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The $7,500 credit is for people buying their first homes, and was passed as part of the Housing and Economic Recovery Act of 2008 and signed into law in July. To qualify for the full $7,500, individuals must earn less than $75,000 annually, while couples may earn up to $150,000. Individual buyers with income of up to $95,000 and couples with income up to $170,000 are eligible for a partial credit.
Buyers who have not owned a home in the past three years can take a tax credit worth 10% of a home’s sale price, up to $7,500, whichever is smaller.
The credit is good for homes closed on after April 9, 2008 and before July 1, 2009, and can be taken on taxes filed during 2008 or 2009. Even buyers who bought a home before the bill passed, but after April 9, can claim the credit.
Unlike tax deductions, which only offset taxes by lowering taxable income, the tax credit is a straight dollar-for-dollar deduction of your tax bill. So a buyer who would ordinarily pay $8,000 in taxes would pay just $500.
It’s also “refundable,” which means if a buyer’s taxes are less than $7,500, the government will send them a check for the difference. For example, if a couple’s income generates a tax bill of $5,000, the government will refund all of that plus $2,500.
Buyers must start paying back the loan within two years, at a rate of no more than $500 a year for 15 years. When the the home is sold, any outstanding balance will be repaid from the profit; if it’s sold at a loss and the difference will be forgiven.