The FHA Training Manual used for mortgage loan officer training by industry leaders such as National Association of Mortgage Brokers and hundreds of other companies! This FHA Training Package includes a 380+ page manual, an FHA Refinance Guide, an interactive CD and Free Updates. Read more!
This afternoon the U.S. District Court for the District of Columbia has issued an injunction on behalf of Partners in Charity Inc., Futures Home Assistance Program, Sovereign Grant Alliance, Genesis Foundation, Home Down Payment Gift Foundation, Freedom Home Baptist Church, Inc. and the Dove Foundation, Inc. against the HUD rule to eliminate seller funded down payment assistance programs. This injunction opens the door for sellers to continue use of down payment assistance programs until a final resolution on the rule is determined.
One of the most frequent solicitations being received by mortgage brokers these days is an offer from FHA approved lenders for the non-FHA approved mortgage broker to be paid “up to 3 points” for referring an FHA loan to the lender. There IS a provision for non-approved mortgage brokers to be paid, but these ridiculous plans for mortgage brokers to be paid exorbitant fees will be cracked down on. Here’s an announcement from HUD on this issue which was sent out this afternoon (10/30/2007):
All-
THE SUBJECT MESSAGE IS APPLICABLE ON FORWARD MORTGAGES ONLY
POLICY ALERT – RESPA/FHA EXISTING POLICY REGARDING NON FHAAPPROVED MORTGAGE BROKER FEES IN FHA MORTGAGE TRANSACTIONS
The subject alert reconfirms existing FHA policy regarding the use of non FHA-approved mortgage brokers. FHA loan origination services must be performed by a FHA-approved lender or FHA approved mortgage broker (loan correspondent). A loan correspondent may be compensated for the actual loan origination services it performs either directly by the consumer or indirectly by the FHA approved lender without being in violation of either the RESPA statute and regulations or FHA regulations.
If you are divorcing or already divorced, and the divorce decree requires that you remove your spouse from the loan on the property AND pay them their equity AND you’ve got a few credit problems, don’t panic. For an FHA refinance, this is still considered a rate/term refinance even though you are paying out cash to you ex-spouse.
In part 1, we noted that many manufactured homes are purchased with loans which have terms that make refinancing an absolute necessity. Owner financing or bank financing with high rates and/or balloon notes need to be refinanced as quickly as possible.
Let’s now explore the qualification and processing requirements for using an FHA insured loan to refinance a manufactured home. Most of these items should be handled by your mortgage professional, however it is useful for you to be aware of the guidelines yourself.
The first step is to determine whether the home was built after 1976 according to HUD Code. This is very easy. For each section of the home, you will find a HUD certification label attached to the end of the home. Adherence to the HUD code is the major difference between modular homes and manufactured homes.
This label will look like this:
There will be an identification number stamped into the label and later, the FHA appraiser will be required to verify that this label is affixed to the home.
I am normally a huge fan of the Competitive Enterprise Institute and everything they do to support the cause of freedom in the world. John Berlau, their director of the Center for Entrepreneurship has recently published a commentary which has made its way through the major papers and is available here or here.
In the commentary, Mr. Berlau argues against expanding the scope of FHA and places FHA programs in the same basket as subprime loans by throwing out a few statistics and some anecdotal evidence from particular areas. In the end, although Mr. Berlau does highlight some important areas to watch, he has some of the facts skewed just enough that it puts his conclusions at issue. The commentary states:
For the past three years, delinquency rates on the oh-so-safe mortgages insured by the FHA have consistently been higher than even those of the dreaded subprime mortgages. In the last quarter of 2006, for instance, the delinquency rate for subprimes had increased to 13.33% in the National Delinquency Survey compiled by the Mortgage Bankers Association. But in the FHA category, the rate had risen to 13.46% — “a new record.”
Nationally, FHA-backed loans do have a lower foreclosure rate than subprimes do, but one that’s nearly twice as high as the rate for all mortgages. And in certain regions, FHA-insured loans account for a disproportionate share of mortgage woes.
Please note the logical inconsistency there. Why would FHA foreclosures be lower than subprime mortgages if the delinquency rate is higher? There are several possible reasons which will indicate that FHA loans are a very different bird than subprime mortgages.
Every day for the last month, I’ve had people asking me when changes are going to be made to the FHA loan program. I’ve been trying urgently to get some more information. According to this column by nationally syndicated real estate columnist Kenneth Harney in Realty Times, we aren’t the only ones confused. Read the rest of this entry
I received a comment about one of my previous posts on the endangered non-profit assistance programs and FHA loans which mentions a trend I’m seeing in many solicitations lately.
Here’s the quote:
Earned Income DPA’s are still alive and functioning and in fact are specifically approved in the new HUD Ruling. Here is the comment from the report.
Comment: Real estate agents should be permitted to use their commission to fund the downpayment where the real estate agent is the buyer/mortgagor, because the commission is earned, and not a seller contribution or gift.
HUD response: The circumstance described by this comment are not affected by this rule, because a borrower’s earned income, such as a real estate agent’s commission, is a permissible source of downpayment.
[link to the program removed]
When you can’t use the gifting DPA’s the earned income programs can help!”
I’ve been hearing a lot about these earned income down payment systems from several sources for a while now, but I haven’t noticed them taking off yet. They offer a commission to the borrower for selling a membership of some kind to the seller of the home they are buying. I think part of the reason they haven’t taken off is that we loan officers instinctively feel that it violates the intent of the rules, if not the letter, and that it will be cracked down upon if it comes into wide usage.
Purchasers of manufactured homes often use short term financing from a bank (for example, a five year balloon note) or short term, high interest rate owner financing to cover the cost of setting up their new home. Since each of these methods of financing the manufactured home must be paid off in a short period of time, owners of manufactured homes should begin looking for replacement financing as early as the end of the first year. The end of the first year is the beginning of the time that the loan can be based on the appraised value of the home instead of its original sales price.
