30 Sep 11 FHA Loan Limits Decline Tomorrow
For those of you that don’t know there is bipartisan legislation, The Homeownership Affordability Act of 2011, has been introduced in the House and Senate that would extend the current Fannie Mae, Freddie Mac and FHA loan limits for two more years but most insiders don’t believe the bill will pass. Unfortunately there has not been enough of a lobby against the declining loan limits because it will only dramatically affect 5 or 6 states. Beginning tomorrow, the maximum limit for government mortgages will fall in many of the nation’s high cost real estate markets. Over the next few weeks it’s worth watching what happens to sales of properties priced between the new and old limits For details on how the loan limits will affect your state read 2012 FHA Loan Limits on the Nationwide blog.
09 Jun 11 2012 FHA Loan Limits Declining
Many mortgage professionals have voiced their concerns in regards to Congress lowering the 2012 FHA loan limits. Many homeowners in high cost regions will be unable refinance with FHA. The pending change in federal loan limits will have a much larger impact on FHA home loans than on those purchased or securitized by either Fannie Mae or Freddie Mac. Unless Congress says otherwise, the shift will take place on October 1st.
According to a recent article in the National Mortgage News, “three times as many markets that will be affected when it comes to FHA loan limits compared with conforming loan limits backed by Fannie Mae or Freddie Mac. The Federal Housing Finance Agency published a report citing that only 250 county or county-equivalent areas—a “small fraction” of the total, the FHFA said—will be affected by the pending change. The FHA study indicates that its FHA limits would fall by more than 5% in eight states—Arizona, California, Colorado, Connecticut, Massachusetts, Maine, New Hampshire and Oregon—as well as the District of Columbia.
When evaluated for the potential impact on the number of loans eligible for government insurance, Colorado, Maine and Oregon fall off the list with the 2012 FHA loan limit impacting $221,000 borrowers. But that would only impact 4% of those areas’ loan count, the FHA analysis says. Other places would take big hits, too. The California FHA loan limit is projected to fall by $75,200 in Maricopa County, Ariz., from $346,250 to $271,050. Phoenix is in Maricopa County. In Los Angeles County, the lid would drop $104,250, from $729,750 to $625,500. But in Mendocino and San Joaquin counties in California, it would sink by $138,750 and $184,000, respectively. The change could be equally as tough on the East Coast, too. In Monroe County, Florida, for example, the FHA loan limit in Florida is projected to plunge by $200,500, from $729,750 to $529,000.
Until three years ago, FHA mortgage insurance limits were set at 95% of the median price house price for each particular area. But the maximum could not exceed 87% of the ceiling placed on the GSEs or go lower than 48% of that ceiling. In February 2008, however, Congress changed the formula in an effort to mitigate the economic downturn by temporarily setting the limit at 125% of the area median but not to exceed 175% of the GSE limit of $417,000. Five months later, though, lawmakers changed the rules again when they passed the recovery act, this time by assigning the task of setting the conforming loan limit to the newly created FHFA. Read the original article online at NationalMortgageNews.com
09 Jun 11 FHA Finance for First Time Home Buyers
FHA is a government insured loan program that was originally designed for first time home buyers. FHA was established to ensure that all Americans could get access to affordable home financing. The current FHA interest rates are lower than most other mortgage products as well. FHA financing enables home buyers to get low payments because FHA rates are more affordable than most people realize.
Whether you are a first time buyer with good or bad credit, you can finance a new home with an FHA mortgage with ease. Simply talk to a FHA approved lender about qualifying for a government loan that meets your needs. HUD recently tightened credit guidelines with FHA loans, but they are still easier to qualify for than most other 1st time loan programs. If you have been looking for a new home and a new lending solution, however, this might be exactly what you have been searching for. Read the original article > Financing a Home with FHA
06 Apr 11 Looming Government Shutdown Could Have Negative Impact on FHA and the Mortgage Industry
Lenders across the country have been scrambling this week, because the FHA mortgage loans could be placed on hold during the government shutdown. According to FHA commissioner, David H. Stevens, if the government does shut down, HUD will be forced to stop endorsing new FHA mortgages. According to a memo drafted by a housing trade group, “FHA cannot offer endorsements for any new FHA loans in the Single Family program and are not allowed to make further commitments in the Multifamily if the government shutdown happens.” FHA lenders will need to brace for the government shutdown or shift gears with conventional loans backed by Fannie Mae and Freddie Mac.
Wells Fargo & Co. spokesman from the country’s largest home loan lender said that “Wells Fargo would expect to be able to take loan applications and close mortgages provided that a shutdown doesn’t continue for any extended period.” But if the federal government shuts down, we won’t be funding any new FHA loans because these loans would not be insured in a government shutdown. Banks can still originate FHA mortgages, but they won’t be able to close them until the government re-opens the Federal Housing Administration.
According to analysts at Keefe, Bruyette & Woods last year, the “FHA insured almost 40% of all mortgage liens totaling $200 billion. According to the GSE regulator, the government shutdown would not stop Fannie Mae and Freddie Mac from buying and securing home mortgage loans.” According to a statement issued by the Federal Housing Finance Agency, “A government shutdown would not impact the operations of Fannie Mae and Freddie Mac as the GSE’s are not subject to the annual appropriations process.” Read the original article online > FHA and the Effects of the Government Shutdown
14 Mar 11 How Higher FHA Insurance Premiums Will Affect the Mortgage Industry
HUD has recently announced that higher FHA insurance premiums will be seen for loans originating on April 18, 2011 or later. This is the 2nd time in 6 months that HUD raised FHA insurance premiums. This will result in higher monthly payments for anyone paying FHA mortgage rates on the private mortgage insurance premium that is required for people with FHA home loans. Of course, representatives from FHA argue that the minimal quarter of a percent increase will not greatly affect anyone’s ability to pay the premiums. However, it is certain that higher insurance premiums diminishes the FHA streamline and leads to the fact that monthly savings for FHA refinancing reduced and sometimes even eliminated.
Breaking Down the FHA Numbers
The higher FHA insurance premiums on 30-year mortgage loans will rise to 1.1% or 1.15% from 0.85% or 0.9%. Of course, many people are aware that this is the2nd time in 6 months that HUD raised FHA insurance premiums. Indeed, in November, 0.85% or 0.9% became the new rates, up from 0.50% or 0.55%. The higher monthly payments are equal to a quarter of a point increase in interest since November. This seems minimal until you realize that this change in FHA interest rates will increase the cost of a $157,000 mortgage by $33 per month.
In cases of more expensive mortgages, such as those obtained by people living in the Golden State, a $475,000 California mortgage could result in higher monthly payments of more than $100 more every month. That means higher FHA insurance premiums result in $1,200 more per year for these borrowers. One of the great advantages of an FHA loan is its level of affordability, but higher insurance premiums diminish the FHA streamline and make it less desirable.
Plus, since monthly savings for FHA refinancing reduced and sometimes even eliminated, many borrowers many not benefit from mortgage rate refinancing. These borrowers will not end up saving money at all because the higher FHA mortgage insurance premiums will offset the low FHA interest rates of the mortgage itself. You will not be directly affected by the fact that this is the 2nd time in 6 months that HUD raised FHA insurance premiums if you already have an FHA home loan, a reverse home loan, or a home equity conversion loan. It is no surprise that people will undoubtedly be rushing to be accepted for their FHA loan before April 18, 2011 so they are not forced to make higher monthly payments on their insurance premiums.
01 Mar 11 Higher FHA Insurance Premiums Making Loan Professionals Nervous
In an effort to bolster its capital reserves, the Federal Housing Administration reported that they are raising the required annual mortgage-insurance premium for FHA loans by 0.25% of the loan value. Even after a major insurance premium hike just last November, but the government finance agency has decided to raise the costs of a FHA mortgage even more. HUD announced last week that the FHA insurance premium will increase to 1.1 or 1.15% of the loan amount on 30-year fixed rate mortgage and 0.25 or 0.50 for 15-year or shorter mortgage terms.
FHA commented recently on their plan to hike insurance premiums for the FHA loan programs. A FHA spokesman said, “The new changes are only a modest increase and would have little impact on the affordability factors for most home buyers who would qualify for a new home loan.” But many mortgage professionals have a different perspective. According to Josh Slemmons of the Mortgage News Post, “Borrowers who do not have enough equity in their home to qualify for conventional loan need a FHA because the program enables borrowers to qualify for mortgage rate refinancing up to 96.5%.”
FHA Commissioner David Stevens said the higher insurance premiums would help lift the capital reserve requirements set forth by Congress. Stevens said the move still allows the “FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.” The April 2011 FHA insurance policy change will only affect the annual premium. So the increased amount gets added onto the borrower’s home loan payments — it’s not added to the upfront lending costs. Read the complete article posted on the Nationwide Mortgage Blog > Effects of Higher FHA Mortgage Insurance Premiums
25 Feb 11 Higher FHA Loan Fees Coming
According to recent data released, FHA loan applications for refinancing and home buying were lower in January than in the previous month or in January 2010. Many mortgage professionals believe the loan demand has dropped as the interest rates have risen. According to the Department of Housing and Urban Development FHA loan applications reached 103,991 in January compared to 112,500 in December and 126,043 a year earlier. The year-over-year figure reflects a drop of 17.5%. There were 55,417 applications for home purchase and 41,178 for mortgage refinancing.
Will borrowers rush to lock into a FHA loan before HUD hikes the FHA Fees?
Year-to-date figures also show a substantial decrease in activity between FY 2010 and FY 2011. Total applications are 26.7% lower with purchase mortgages down 34.3% and refinancing off 22.1%. Total endorsements are 24.1 % off of the 2010 pace with most of the fall-off accounted for by the purchase sector which was down 34 %. FHA refinancing endorsements fell8.1 % and HECM endorsements are at -23.3 % the 2010 level. The total unpaid principal balance amount is $947.8 billion. The portfolio has a current delinquency rate of 8.9 % with 612,443 loans over 90 days delinquent. In December the rate was 8.8% and one year earlier it was 9.2%. The weighted average FICO score for FHA loans was 703, one point higher than the previous month and nine points above the score a year earlier. Many industry insiders have signaled that HUD is tightening guidelines and elevating the FHA credit requirements in 2011.
According to the Lead Planet, in January there were 5,735 FHA loan applications a day. The Department of Housing and Urban Development indicated that the average processing time from application to funding was slightly over 2 months. These figures are from the Single-Family Operations Report for January issued this week by HUD. Even as FHA mortgage rates have increased in 2011, the popularity has been raised since the beginning of the foreclosure crisis but the agency has also raised upfront and annual premiums in the past year. Thirty-year home loan rates have risen more than half a point since the record lows in December of 2010. Declining loan demand in January is no surprise given the uptick in mortgage rates we witnessed. FHA rates are now off those highs but loan production has yet to pick-up. We are curious to see how the FHA’s decision to raise the annual mortgage insurance premium will impact loan demand before the new fee structure goes into effect on April 18th.
01 Feb 11 Flipping Homes with a FHA Finance
Obama signed off the FHA loan program that allows people or groups to use FHA financing for flipping homes. Most lenders have becomes used to relying on FHA refinance and home purchase loans insured by the U.S. government. The FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition since last February, when the waiver was first issued, the agency said.
Government lending is still very tight and loans backed by the FHA, which does not make loans directly but guarantees them for borrowers who meet certain restrictions, are the only option available to many borrowers. A few days ago HUD extended the FHA home financing for people flipping homes to obtain government insured home financing. Read the original FHA Financing for Flipped Homes article.
> Read more articles like the Best Home Loans.
06 Jan 11 FHA Mortgage Training for Loan Officers
Today, XINNIX announced a new FHA mortgage training course for loan officers. This Web-based class provides loan officers with a working knowledge of FHA loan guidelines. The current lending climate has seen a sharp increase in the demand for FHA mortgage loans. With FHA rates rising and refinance activity on the decline, FHA mortgages will remain a preferred option throughout the next year. To capitalize on this market opportunity, loan professionals must cultivate and actively demonstrate a working knowledge of FHA guidelines.
This four-part training course helps loan officers understand FHA loan guidelines, including applications, disclosures, lending limits, eligible properties, underwriting requirements and refinancing. The course concludes with a comprehensive test to validate the knowledge gained on FHA. To date, FHA has 4.8 million insured single-family mortgages and 13,000 multifamily projects in its portfolio. With less stringent underwriting guidelines than conventional loans, FHA-insured loans enable more borrowers to qualify for a loan. Borrowers must meet specific requirements established by HUD to qualify for a FHA loan.
18 Nov 10 FHA Loan Forecast Looking Bleak
Few would argue the impact the FHA mortgage products have had on the mortgage industry over last few years. With FHA mortgage rates at record lows, it’s logical to think that FHA originations would increase in 2011. However, HUD forecasted that the Federal Housing Administration will endorse $288.7 billion of single-family FHA loans in fiscal year 2011, a 9.4% decline from FY 2010, which ended September 30th.
The Department of Housing and Urban Development also projects that originations of FHA reverse mortgages will decline 11% in 2011 to $19 billion, despite the introduction of a new HECM Saver product. Endorsements of Home Equity Conversion Mortgages fell 30% in FY 2010 to $21.1 billion. FHA hopes originations of home equity loan savers will cross-subsidize the standard HECM product, allowing the reverse mortgage program to escape credit losses that might lead to a Congressional appropriation.
Based on information published in its October ‘Single-Family Outlook’ report, HUD believes total home foreclosures will level off in FY 2011. The FHA agency projects 100,000 foreclosures in 2011, compared to 99,650 in FY 2010. Loan servicing company will complete 185,000 FHA mortgage modifications and other loss mitigation actions in 2011, compared to 183,000 the previous year, the agency believes. Meanwhile, home loan lenders closed $24.4 billion of FHA mortgage loans in October, flat from the previous month. The October report also shows that the percentage of FHA home loans that are 90 days or more past due fell to 8%, compared to 8.4% in September.
19 Oct 10 FHA Sets Policy Straight for Lenders
The proposed FHA rule also sets a benchmark for mortgage lender performance in terms of default and claim rates. FHA lenders in the lender insurance program must maintain a claim and default rate that is at, or below, 150% of the national average. The national average for FHA claims and defaults on mortgages 24 months old was 3.66% at June 30th. The proposed rule is aimed specifically at lenders, which make up only 29% of all FHA-approved lenders. HUD claims it does not have explicit authority to require indemnification for bad loans from other FHA-approved lenders. HUD Clarifies Indemnification Policy for FHA Lenders
18 Oct 10 FHA Mortgage Fraud Prevention
FHA mortgage lenders have indicated that FHA fraud is “the area that HUD are focusing in on in 2010. While there is strong FHA underwriting, it doesn’t stop the fraud from happening. FHA is “still very attractive” to the fraudsters and fraud rings because they like to recruit straw borrowers. “FHA guidelines, in terms of who qualifies and how much they have to put down, are a lot more lenient than the typical type of conforming programs. They can recruit young college graduates who don’t have a lot of credit history or people who don’t have great credit history and they only have to come up with 3.5% down-payment.”
In order to help FHA lenders with some of their pain points, CoreLogic has launched a short sale monitoring solution, which it will most likely extend to foreclosure monitoring. Through the cooperative database, lenders can share their information on what properties they are short-selling. “If there are any subsequent loans that are being made on those homes, we will notify the lender so they can stop them,” McKenna said. “It’s probably less about the technology and more about the sharing of data. The big piece of it is that lenders agree to share their information with each other to stop fraud. Most of the big lenders are involved. Just last week, five of them sent in their data to pilot the solution. We are getting a lot of traction in the sharing concept.”
CoreLogic started the data sharing a couple of years ago for shot-gunning fraud through a multi-closing alert program. Lenders shared their data to be notified in home equity lines of credit when there were other loans being made on the same property concurrently with their own. “To date, known dollars saved is something over $300 million in loans that were stopped because of the fraud ring activity. It basically eliminated the problem.”
Among other highlights from the meeting, HVCC requirements are something lenders want to know if the fraud rate is lower when the appraiser is independent form the broker. There are certain loan programs that are not requiring that independence, McKenna said, and brokers are allowed to pick appraisers. See the original article online > FHA Loan Programs Longevity
04 Oct 10 Is HUD Eliminating the FHA ARM?
The talk around the water coolers in mortgage shops has been whether or not HUD is pulling the plug on their 5/1 ARM. Even though the 5/1 ARM volume is relatively low for FHA mortgages (2.7% of 2010 ARMs for FHA originations), it is still a niche product that remains popular in high cost regions like California and New York.
A few days ago, Freddie Mac reported that you could get a 30-year fixed-rate mortgage at 4.37%. At the same time, the 5-year Treasury-indexed ARM had a start rate of 3.54% while the 1-year Treasury ARM began at 3.40%. FHA rates below 4% are appealing but the 15 or 30-year term offers so much more security.
. On the flipside, for new homebuyers in high cost regions the difference between the 5/1 ARM and the 30-year fixed rate is several hundred dollars a month. Besides there are borrowers that are quite sure they will be in their home for less than 5 years, so why not extend them this option. Read the original post on the FHA Loan Blog > Is FHA Eliminating Adjustable Rate Loans?
29 Sep 10 Is FHA Dropping Jumbo Loan Assistance?
Jumbo home mortgages will most likely be shelved by the end of the year as the U.S. government looks less likely to continue supporting higher loan amounts on FHA loan programs. The fact remains that government assistance for many high loan amount programs is about to expire. Many believe that Congress will reduce the 2011 FHA loan limits. The FHA limits are set to expire as well and HUD’s favorite first time home buyer program could be adversely affected.
After two years during which Fannie Mae and Freddie Mac were authorized by Congress to back loans up to $729,750, the limit in some areas will fall back to the normal $417,000 limit. High-cost areas on the coasts, such as New York City and San Francisco, will lower the loan limit to $625,500. Some industry experts anticipate that the move will further undermine home prices, while some economists say that the effects of the shift are unlikely to change affected markets dramatically. The Obama administration announced recently that they would push for a 1-year extension to the high limits, to help stabilize the housing market nationally. It appears that the Jumbo mortgage loan market will remain challenging for lenders and banks until the housing sector rebounds.
14 Aug 10 FHA Loans Costs Increasing in October
HUD announced they have increased the annual FHA mortgage insurance premium. FHA costs are rising from 0.55 % of the FHA loan amount to 0.90% (for loan to values higher than 95%) or 0.85% (for LTVs lower than 95 %). This insurance premium hike will go into effect, October 4th, 2010. In an effort to save face, FHA will be lowering their upfront mortgage insurance to compensate homeowners for their rising monthly payments. This is good news for new homebuyers because the FHA lenders are offering record low rates and loan fees are being reduced to 1% of the loan amount from 2.25%. The FHA requirements are becoming more demanding for both lenders and consumers, but HUD believes that tighter guidelines can salvage FHA lending now and for the near future. Read the original article online > FHA Mortgage Costs Rising
