I have always respected the Wall Street Journal as a source of information. Yet all too often I find that when a subject I actually know something about is discussed, the information is off the mark! On May 4, 2009, there was an opinion piece on the online Wall Street Journal Opinion Journal entitled “The Next Housing Bust“. The opinion given in this piece may possibly have the right conclusion for all the wrong reasons.
HUD has created a new online version of the FHA guidelines. There will still be confusion – because HUD rarely makes the implementation of their guidelines completely clear – but at least the HUD 4155 will be up to date. Loan officers and processors can find the new online handbooks here.
For the first time ever, FHA appraisals have effectively actually had fewer extra requirements than conventional loan appraisals. This has been corrected effective April 1st with HUD Mortgagee Letter 2009-09 which establishes appraisal requirements for declining (in other words, most) markets. Of course, many of these policies have already been implicated in practice by lenders.
The long expected lowering of the FHA Cash Out Refinance Loan to Value has now occurred effective for Case Numbers dated April 1, 2009 or later. Details are available in Mortgagee Letter 2009-08 (opens as a Word document) dated March 12, 2009.
Originating FHA insured mortgages has long been one of the most effective ways for professional loan officers to make a good living without sacrificing the well being of their customers. Low rates, no prepayment penalties, no rates that jump up 5% after 2 years, no negative amortization. A true opportunity, if you knew what you were doing, to combine helping people who really do need the help with making a good living.
Every single day I receive numerous emails and phone calls from loan originators and potential borrowers asking whether FHA guidelines have changed and asking me why a particular loan scenario can no longer be approved as an FHA loan. Consumers, in particular often get confused when I explain that FHA guidelines are not the issue. The problem is with the lender they or their mortgage broker have chosen.
HUD has always had a little patience with those lenders who did not get their audited financials prepared in time. The FHA guidelines up to now have provided for a 30 day warning notice. During that 30 days the lender had the opportunity to cure the infraction, pay a $1000 fee and not risk losing their FHA approval. As usual in the mortgage business, lenders have taken advantage of this accommodation.
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