Entries Tagged 'FHA guidelines' ↓

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Here is HUD’s press release on the new loan limits in case you haven’t seen it. It is a lower limit for several areas that had temporarily higher limits to try to help overcome the foreclosure problems those areas are facing. Maybe that crisis was resolved and I just didn’t notice? Anyway, here is the press release. Not much more for me to add. Continue reading →

To clarify, I should say rental income from converting a borrower’s existing home to a rental can only be counted under very limited circumstances.

HUD has just issued Mortgagee Letter 2008-25 “Converting Existing Homes to Rentals-Underwriting Instructions”. Due to the number of people who are walking away from their present home as soon as they close on a new one, HUD has issued this Mortgagee Letter which states: Continue reading →

The Housing and Economic Recovery Act of 2008 goes into effect on October 1, 2008. As part of this Act, Congress placed a one year moratorium on risk based mortgage insurance premiums on FHA loans.

Under the risk based  premium structure that HUD put into effect on July 14, 2008, borrowers with better credit and lower loan to value mortgages are able to pay lower rates while riskier loans carry higher insurance rates. A perfectly sensible system that FHA statistics show may actually be a major benefit to lower income borrowers since this members of this group with FHA loans have been shown to have higher credit scores on FHA loans.

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As I spend time reading all the websites that seem to rejoice over reciting every detail of the downfall of the mortgage industry, I see many comments bringing attention to HUD’s efforts to get rid of seller paid down payment assistance. I usually find that these comments are being made by those with no access to any real information other than the misleading and often inaccurate numbers issued by the political appointees at HUD.

I found it refreshing to read a July 23, 2008 opinion column on the Atlanta Journal-Constitution website written by Robert Motley, the CEO of Pine State Mortgage in Sandy Springs, GA… Continue reading →

On Oct. 30, 2007, I published a post entitled “FHA Mortgage Co-brokering: Watch Out!” in which I warned of potential violations of FHA’s policy regarding payments to non-approved mortgage brokers. HUD made an announcement that day outlining their policy, but it was not issued in the form of an official Mortgagee Letter and it did not clearly identify that the policy applied to any fee paid by the borrower and not just payments made through yield spread premium.

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In response to my post “Warning: Why HUD May Stop Your Loan From Closing“, HUD has now waived their anti-flipping rule in certain circumstances. (Just kidding about them responding to my post, but they have taken action.)

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One of the most touching experiences loan officers go through when we conduct marketing campaigns seeking FHA mortgage prospects are the borrowers who call us wanting to buy a home for their family but they just have too much bad credit to overcome in order to qualify for even an FHA loan. Often they have a bankruptcy.

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HUD is once again about to propose the rule banning down payment assistance programs and open it up for a 60 day comment period. You can find more about that at the link above.

HUD continues to use higher default rates associated with loans using DPA as their rationale for killing off the non-profit down payment assistance programs. However, you can’t use HUD’s raw statistics to say DPA causes a higher foreclosure rate, only to show that DPA is associated with a higher foreclosure rate. The reason is that these raw figures aren’t adjusted to account for other factors such as credit, debt ratio, time on the job, local economic conditions etc.

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