Nevada Real Estate >> Las Vegas Real Estate Specialist: FHA Loans - Some rumors are now reality - Important information about FHA mortgage changes !!!

FHA Loans - Some rumors are now reality - Important information about FHA mortgage changes !!!

 

 

FHA Loan rumors now become a reality – So what happened?

 

fha loans & fha mortgages

Wow... I just talked about some rumors that have been floating around for months about FHA loans. Let me make something clear. They are rumors to me until they are officially stated through HUD/FHA. And on that note, they are also rumors when you read blogs that actually state that they happened already, when it was still in discussion. Here is what I said yesterday.

FHA Loans Rumor Alerts - 3% seller concessions & FICO scores - Part 1 of 2

In our ever changing world of mortgages in the last several years, FHA made a few changes that were announced today, but there is no concern to panic, at least in my opinion. You can read it directly on HUD's web site.

FHA Announces Policy Changes to Address Risk and Strengthen Finances

 

 

 

 

*** The FHA Loan changes as of January 20, 2010 ***

 

So what are some of the major changes or possible changes in the near future and what impact could they have on the average homebuyer? (4 changes below)

 

  • FHA Upfront Mortgage Insurance Premium - Known as UFMIP - This is what gets added to your loan amount after your down payment is subtracted from your purchase price or your base loan amount of what you are refinancing. The old amount was 1.75% for purchases and refinances and 1.50% for all FHA streamline refinances. It will now be raised to 2.25%. HUD is also requesting that Congress increase the annual premium, which is your monthly mortgage insurance. Currently it is .55% and .50%, depending on your LTV position. This change will not take place until the spring. (more on this below)

Example of the UPMIP change - Sure, it will hurt some, but that extra 1/2% on the total does not change the payment as much as you think it does. On a $300,000 loan, you are talking about an additional $1,500. This equates to an additional $8 per month.- Not much to disqualify someone, depending on how high their debt-to-income ratio was initially pushed.

 

  • FHA credit score and downpayment changes - As mentioned yesterday, FHA mortgages never had a FICO score (credit score) number. It still doesn't and here is where the rumors went wrong.  FHA has raised their credit score requirement for 3.5% downpayments to 580. Previously, you needed to have a credit score of 500 or higher. I will talk about this difference in change tomorrow in Part 2. This change will not take place until early summer.


  • Reduction in allowable seller concession from 6% to 3% seller help -  Just basic mathematics... the buyer won't be able to get more than 3% from the seller to pay for their closing costs and pre-paids. This change will not take place until early summer.

 

  • More awareness of FHA lenders perfromances - Basically giving the public more information and more access to this information. This can be found in # 4 under the new policy changes. New FHA policy changes

 

 

 

 

So why the changes and what do they do to you, the borrower?

 

As many of you know, HUD has been suffering major losses within their mortgage insurance pool. HUD just insures these loans. This is the money that is collected from the UPMIP and the annual monthly mortgage insurance (MMI). Here is some food for thought. HUD states this. "This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing."

 

FHA gets the Upfront Mortgage Insurance Premium (UPMIP) from the lender very quickly after the loan closes. This is upfront cash. But they want to shift some of this weight to the monthly mortgage insurance, claiming that it will reduce the total monies to the borrower. It is hard to argue this until we know what number they want to increase the monthly fee to. Once I know what the new percentage is, I will write a blog in regards to this shift to the MMI that in my opinion is smoke and mirrors. I will explain more in that blog.

 

Why change the credit scores to include a higher downpayment if you have a score below 580?  This basically allows FHA to balance its risk, yet still give anyone the chance to obtain a FHA mortgage. But keep in mind, they would need 10% down. I will be talking about this in part 2, giving you a better understanding of how hard these types of loans will be to obtain and why.

 

Lastly, lowering the seller concession from 6% to 3%. This has been a long standing discussion that appraisal values were raised to cover the additional expenses to the borrower, allowing the seller to pay for them. This effort also tries to keep those agreement of sale contracts from changing to a higher purchase price, just to cover such costs as mentioned above.

 

 

Keep in mind, there will be a new FHA mortgagee letter that will be out officially tomorrow, giving more detail.....and that this is not 100% official until the mortgagee letter is published. And as mentioned, the next step for HUD is to get congress to act on increasing the annual monthly mortgage insurance, which is known as MMI.

 

 

 

Important Reminder – be very careful of what articles you read about FHA loans. Several articles came out late yesterday, before HUD posted their own information. I have already read one article that was missing 1 of the 4 changes. And one article was giving bad opinion and advice, in my opinion, based on their lack of knowledge and experience in the mortgage industry. Keep in mind, they are just journalists trying to get some sort of news to the public as soon as. The new mortgagee letter will be out tomorrow. – 1/21/10

 

 

FHA Loans Rumor Alerts - 3% seller concessions & FICO scores - Part 1 of 2

FHA Loans Rumor Alerts - You don't need 10% or 20% down & more about credit scores - Part 2 of 2 (not truly all about part 2, but I do go into discussions about the credit scores - because of the recent FHA changes, I didn't get into great details about 10% or 20% down)

 

 

 

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

_____________________________________________________________________________________________________________________________

 

 

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The FHA Expert's fan page on Facebook     Add Jeff Belonger to your network @ LinkedIN

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- FHA Loans - USDA Loans - VA Loans -

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- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

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Mortgage Myth Busters

 

______________________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comment balloon 87 commentsJeff Belonger • January 20 2010 11:03AM

Comments

hahaha- we've both been busy eh?

great right up of the FACTS Jeff, as always. Let see what dates and effective procedure are announced in that ML tomorrow. Talk at you soon!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Posted by Gerry Suarez Jr., FL Mortgage Guru (Jet Home Loans NMLS 1660135) over 9 years ago

Thanks for the great, detailed information!

Posted by Lesley Lambert, Real Estate Agent - Realtor - Westfield, MA - 413- (Park Square Realty serving Western MA) over 9 years ago

Good stuff Jeff.  I did a qucik post about this when i heard the news late last night. I think the whole credit score requirement is the one item that is not that big of an issue. I am not sure about you but finding someone that will do under a 620 is tough and the pricing on that loan is even worse.

Posted by Roy Paeth, Just a regular guy helping real people! (Keller Williams Inspire) over 9 years ago

 

GERRY..... . yea, I guess we were both busy on this one. Well, they gave us ideas about when, but I guess we have to wait until tomorrow. On top of that, it will be interesting to see how much HUD will be pushing Congress to raise the monthly mortgage insurance to. This will tell the story. thanks

LESLEY.... . my pleasure and thanks for stopping by.

ROY..... I will check out your blog soon. I read some of the news from last night and it's sad... some of it does not match what HUD put out today and one article left out the annual monthly mortgage insurance as one of it's possible changes.  And in regards to the 620 credit score and FHA raising their credit score to 580 for the 3.5% downpayment?  I will be writing about this tomorrow.  thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Jeff,   In your updates, I assume you will mention that some of the changes will be released for public comment.  At it says "This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer."  I for one will watch for the opportunity to comment on the changes and hope that others bookmark your post to find out how AR members can express their thoughts.  

Posted by Tim Bradford, NMLS 250013 over 9 years ago

Jeff Thanks for the Update.  So from what you can tell we won't see these changes until after the tax credit expires?

Posted by Nick Good, www.TheGoodHomeTeam.com (The Good Home Team with Keller Williams Realty) over 9 years ago

Man just when we were starting to get the hang of FHA they go and change it!  I will be staying tuned to see what happens?

Thanks for the information!

Posted by Frank Marta, Texas Home Loan Specialist NMLS#: 245813 (Nuhome Group, LLC NMLS#:835196 - Houston Tx | Mortgage Broker| 713-373-0345) over 9 years ago

Just "fixin'" to blog the same.. Oh Well.  Great is as great does.

Thanks ... Can I pick up that change on the corners of your blog?

Posted by Jean Kelly (,GRI, Kiser Realty - The La Cita Group) over 9 years ago

Again, glad to have you on board as with the speed and depth of the changes that take place we need an expert here. Thanks for the update.

Posted by James Lyon (Vista Pacific Realty) over 9 years ago

Jeff thanks for the update.  I had already published a quick recap on my outside blog with the information posted this morning.  Looks like I got it correct but will keep an eye on your future posts for updates to share.  Thanks!

Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 9 years ago

The decrease in the seller assistance allowed is going to have a big impact on my market.  Last year, FHA loans accounted for about 43% of the sales in my area and plenty of those included contributions of more than 3%. 

Posted by Lisa Heindel, New Orleans Real Estate Broker (Crescent City Living LLC) over 9 years ago

Great thing this Active Rain is!  We have to opportunity to learn so many things so quickly!  Thanks Jeff for the great info!

Posted by Brian & Marie Spray, Frisco TX Realtors (www.DFWAreaRealtors.com - Action Realty Group) over 9 years ago

The increase in the upfront MIP will hurt because even though one way or another it will be financed, this will increase the mortgage payment and may disqualify some buyers because the DTI will now be too high.

The decreaase in the seller's concession hurts because in high closing cost states like New York, the seller will not be able to cover all of the borrower's closing costs and this means the buyer will now have to bring more money to the closing.

Posted by Paul Warkow (Paul Warkow-D.G. Weber Law Associates) over 9 years ago

Thanks for the update!

Posted by Joseph Keech (Blue Atlantic Properties) over 9 years ago

Jeff, Perhaps one of the problems borrowers face is the increased policies put into place by the actual lenders.It's not the minimum FHA policy. It's the minimum lender's policy that's the hurdle.

Steve

Posted by Steve, Joel & Steve A. Chain (Chain Real Estate Investments & Mortgage, Steve & Joel Chain) over 9 years ago

wow!  what have i been missing out on?

Posted by Lewis Poretz, Business Development Manager (Apex Home Loans) over 9 years ago

 

TIM... .yes I will... I didn't want to add anything more to this post, because it would have been longer. I am trying to keep my blog posts a little shorter this year. This is a good idea, to post thoughts on a blog post.  Thanks for the idea.

NICK.... . well, from the initial information from HUD, that seems to be the case. The actual mortgagee letter should be out tomorrow, making this official. But from what I have read and heard, these changes will be during or after the spring of this year.  Thanks

FRANK... . need to be on your toes... lol  I have been getting use to the changes in the last few years. Time will tell,right? Thanks

JEAN.... . blog away.... we need to get the news out there, and the correct news. I have already seen some that are slightly misleading.  And no, I might need that change.  ;o)

JAMES... . my pleasure and thanks for the kind words... I try my best... thanks

CINDY.... . well, that's good to hear.... could you send me a link to your outside blog?  And ps... it was good to meet you in person last week... finally.  ;o)

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Nice detailed analysis of the changes.  We've been hearing about them for a while, but it's nice to have confirmation that they have gone through. 

Posted by David Monsour, ABR - www.realty-insights.com (Keller Williams Keystone Realty) over 9 years ago

 

LISA..... . I wont\'t disagree with you in regards to the lower sales prices and the low income borrowers. But there are several other avenues to helping with this, such as gifts from non-profit organizations. The gift can be unlimited in percentage. Yes, this is for the seller help and it will hurt some. And even though I am partially against this, I can see why and it was long overdue. I will be talking about this more in my next blog post.  thanks for your input and feedback.

BRIAN & MARiE.... . I truly agree with your statement, and thanks for your polite comments and for your support.

 

PAUL.... . in regards to your first comment, I will slightly disagree.  Sure, it will hurt some, but that extra 1/2% on the total does not change the payment as much as you think it does. On a $300,000 loan, you are talking about an additional $1,500. This equates to an additional $8 per month. That is not much to disqualify someone.  Just food for thought.

In regards to your statement about the reduction in seller help, I will agree that this will hurt more. Especially more so for those in the low income brackets.  Thanks for your input.

 

JOSEPH.... . my pleasure and thanks for stopping by.

STEVE & JOEL.... . yes, the lender overlays,which I talked about in my blog post yesterday. This is up to each loan officer to fully explain this and the differences to the borrower. The problem is that I have seen enough loan officers that don't explain this, and just end up pointing the blame to FHA... saying that it's their guidelines... many borrowers or realtors wouldn't know the difference. Thanks Steve...

LEWIS....  .  Sleep?  ;o)  Seriously, this has been talked about for several months and it finally became a reality today. The mortgagee letter should be out tomorrow, making all of this official.  thanks and let's catch up sometime soon.

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Great information and detail.  This will make a great re-blog to get the information out. 

Thank you

Posted by Mark Watterson, Utah Real Estate over 9 years ago

Jeff: thanks for the update.  I have bookmarked this.  I am working with buyers now that will need the 6% seller concession.  So we better get busy before the change takes effect.

 

Posted by Christine Bohn, The Bohn Team, Gainesville FL (RE/MAX Professionals) over 9 years ago

Jeff

As usual, you are the Man!

Appreciate the info.

Posted by Wayne L. Brown (Franklin Advantage Inc.) over 9 years ago

Interesting how HUD wants to raise the annual premium - this is always a great selling point of the product.  An "affordable" MI option helps so many people. 

Posted by Brian Anderson, SEO and Social Media Marketin (Peachtree SEO) over 9 years ago

 

DAVID.... . thanks for the polite compliment... yea, it's nice to see that something finally took place. I was getting sick of the rumors, saying that some of this has taken place.

MARK.... . thanks for the kind words and for reblogging this.

CHRISTINE.... . my pleasure...  come back tomorrow, because I will have an update with the mortgagee letter when it comes out, making this all official.  And yes, because of this change, buyers need to beware if they need the full amount.  thanks

THOR FUNDING aka WAYNE... . thanks for the polite shout out and comment. 

BRIAN.... . I would agree because I would rather see HUD raise the UFMIP more instead. Yet HUD states that by raising the monthly and either lowering the upfront MIP or keeping it where it is, would save the borrower more money.  Sorry, but I am a money geek and I don't agree. Yet, I can't make a true comparison until I know the new percentage if it does change. But once a change goes into effect, I will be writing a blog about this and showing the true difference.  And we will see if HUD is write or not. What do I believe...?  I truly think it's slightly smoke in mirrors, sales tactics in terms, to make us feel better. But again, I won't know this until it's changed or not.. thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Thanks for writing this blog....I was actually re-blogging it when you sent me the email!  Thanks again.

Posted by Damon Gettier, Broker/Owner ABRM, GRI, CDPE (Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert) over 9 years ago

Good luck getting an approval with a credit score of 580. Most lenders are at 640 these days.

Posted by Mark Towler (Southeast Mortgage) over 9 years ago

Jeff: Thank you for the thorough analysis of the new FHA changes.

 

 

Posted by Janet Guilbault, San Francisco Bay Area Direct Mortgage Lender ( Guild Mortgage) over 9 years ago

As usual great information Jeff! Amazing how much the lending market continues to evolve.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 9 years ago

Jeff and all.....  It has been a long while since I have posted on AR but I have some strong thoughts I would like to offer up. I do not mean to hijack this post and I may even duplicate this blog and make it my own post but I know Belonger gets quality AR people to his blogs and I want everyone to view this.....  

 

 Obama's plan to help struggling homeowners is a joke! I know firsthand. I have a Fannie owned loan and meet all the criteria. My loan is with PNC/Nat City. I have been turned down over the telephone for months now. How can I be turned down when they have never seen any income docs??? I have finally completed a loan mod paperwork...  correction.. I have completed 4 loan mod applications, because they kept losing mine, even though they were                           signed for return receipt.....

 

I have a 2nd with PNC/Nat City - imagine that huh?   After almost a year of promises they actually granted me a mod on my 2nd....  four months later they are asking for back payments because even though i was granted a loan mod saving me $500 per month, they didn't get around to processing my paperwork. yes - my signed, notarized and signed for paperwork... now I am in default... yeah right!!  Did i mention that they froze my LOC a year ago? So today i get a certified letter saying i needed to resign my documents and bring my account up to date (which by their first agreement is up to date) and if i dont pay four months back payments they will not accept my loan mod...  which was accepted several months ago in the first place!

  My house appraised for 780K three years ago... back in the days when all you had to do was show you had a job and you were approved for a 300K LOC...   NO DOC   remember those bad boys??   So i have a first for 260K and a 2nd for 300K    that would mean I owe 560K on a house that is now worth 350K    upside down you say???? Think I am the only one in this boat???

 

Back to my point --  Obama’s plan doesn’t work, Unemployment is still rising, Property values – in most areas – are still declining, Foreclosures are continuing to increase, Credit profiles for American consumers continues to worsen and it is harder to get a loan today than it was last month….   Whew   that was a mouthful!

 

So I ask all my AR buddies, Belonger, Burris, Bettag, Suarez, Miljour, Craig, Cook (who has more balls to tell the world what was up with him than anyone of us will ever have)  Sardi?  (He still out here??) and everyone else I have met along the way…..   what the F is going on? How is this mess going to ever get better when the government can’t enforce the rules they make and get the banks to support the American consumer with government money in the first place? And now they make it harder to qualify for a loan????  WTF…………..

  I have three words for everyone… I said this a year ago and I think it hits even harder today ---  Strategic Loan Defaults   ……   I have even been reading commentary from professors and business experts on how consumers should put shame aside and make the smart business decision and walk away…..   so this leads me to my point and my question for all….

 

What the hell is going to happen when American consumers begin walking away from their homes in masses…   it is going to happen and it is going to happen soon!   God bless you all…………..    whew…  I feel better now------

 

PS – sorry guys, gotta bring this up, it really blows me away…..   My 19 year old son who is a sophomore in college and doesn’t have two nickels to rub together was just mailed a credit card from Bank of America with a credit limit of $5000  

Posted by Lewis Poretz, Business Development Manager (Apex Home Loans) over 9 years ago

Jeff,  Thanks for the great information, as always :)  Would you mind if I posted this on my website with a link to yours?  *mwa* 

I know I may catch some slack here, but...with the way the market has been turned upside down, if a buyer TRULY can't come up with the added expense, then maybe they just need to save a bit more.  This is what caused part of our problem to begin with.  Homeowners MUST plan for the unknown and have a cushion, if they want to be successful homeowners in the long run. 

Let the tongue lashings begin :)

Posted by Elizabeth Cooper-Golden, Huntsville AL MLS (Huntsville Alabama Real Estate, (@ Homes Realty Group)) over 9 years ago

Jeff, your post is very informative - thank you for making it easy to acquire important lending updates.

Posted by Lynn Pineda, Real Estate Promises delivered in SE Florida (eXp Realty) over 9 years ago

 

BRIAN.... . well, if it does pass in congress, I will be writing about this and breaking down the difference. Because HUD in their announcement stated that by raising the monthly, and not the upfront PMI, this would save borrowers more money. I semi disagree, but I can't do a correct comparison until I know what the change would be.. thanks

DAMON.... . lol.. my pleasure and thanks for reblogging this...

MARK.... . I will be writing about the credit score issues tomorrow, in my Part 2... but I will semi disagree, I know many more lenders at 620 than I do at 640. But yes, less than 620, it is a lot tougher and harder than what those loan officers make it sound like... thanks

JANET.... . good to see you.. I like your new picture... and thanks for the polite comment...

BILL.... . thanks for those kind words.... and yes, it is amazing... not much took place in my first 15 years, but in the last 2 years.. wow...

LEWIS.... . HIJACKING taking place...  call 9-1-1...  lol  Seriously, anytime....  in regards to what you stated... damn, I feel for you and I think many Americans are in this boat. Please don't get me started on the political side and agenda of our current administration... but what you need to do is write a blog about this, as the comment that you left me. And I would be glad to reblog it and get others to reblog it. Please let me know about this.... thanks.. and let's catch up some soon.

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

anyone who wants to comment please hit the link  --  

http://activerain.com/blogsview/1445257/my-02-cents-on-what-the-future-has-in-store-

 

as always... thanks Jeff B.  your'e the best!  and it's good to write a post again.......

Posted by Lewis Poretz, Business Development Manager (Apex Home Loans) over 9 years ago

Hi Jeff -- You are the go to guy for FHA, amongst other things, thanks for the info!

Posted by Chris Olsen, Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) over 9 years ago

Thansk Jeff for the FHA Update. Always good to hear about changes as they happen.

Posted by Roland Woodworth, Q Realty - Power In Real Estate (Q Realty) over 9 years ago

It will be interesting to see.  I had heard the rumors and brought them up to a loan officer, who shrugged it off with a "Ha, they've been threatening that for 4 years now."    The closing costs reduction will hurt us the worst here, where it was very common to write in somewhere between that 3 and 6%.   But I don't think that will hurt us too horribly much and is possibly a worthwhile reduction.  It will mean more first timers waiting longer to buy, which could be to their benefit.   I'll be keeping an eye on the timing of all this so I can get my buyers in who really do need that assistance, before the death knell!

Posted by Joel Weihe, Helping you to use your VA home loan benefits (Realty World Alliance) over 9 years ago

I understand all of it except the seller concession reduction to 3% -- don't see any relation between seller concessions and mortgage defaults.

Posted by Aaron Vaughn | Builder | Investor, If the deal makes sense, the cash will follow. (Conifer Homes) over 9 years ago

There are definitely changes afoot.  The change in UFMIP may be annoying, but as you pointed out may not make a huge difference unless the ratios were very tight.  However,this combined with a change in monthly mortgage insurance, depending on what they do, could make a big difference in who qualifies for how much.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 9 years ago

 

ELIZABETH... . first off, never, you can always post my information with a link to my name. I will send you an e-mail.  And secondly, I do side with you for the most part, that buyers should have some savings... but as I have argued in the past, I still would rather seem them keep that money in their pocket, and use such programs as the seller-funded down payment assistance programs and such.  Thanks for your input.

LYNN.... . my pleasure and thanks for the polite comment... and for stopping by.

LEWIS.... . gee, thanks for those very kind words.... and yes, I will pass that link around.

CHRIS.... . I truly appreciated that compliment... thanks again.

ROLAND..... . my pleasure and thanks for stopping by. Today, the 21st, will be the next big step, once the mortgagee letter is out.

SHEREE... . shrugged it off?  hhhhmmmm  and for 4 years?  I have only heard these recent changes mentioned and talked about for the last 6 months.  In any case, yes, I believe the reduction in seller help will be the biggest and will hurt some markets and some buyers. .. the most, the lower end homes and low to moderate income familys.

AARON.... .  I gave a tad insight to this and will be explaining more of this in my next blog, part 2... thanks

CHRISTINE..... .  thanks for actually reading that part.  ;o)  And yes, the raising of the actual monthly mortgage insurance will have more of an impact I believe,  If this does happen, I am already prepared to argue against HUD's stance that this move will be cheaper for the borrower. As I mentioned, on 300k, the total amount is an extra $1,500.  Even if they raised the monthly from .55 to .75, it would only take 2.5 years to match that $1,500. That means someone staying in the house for 2.6 years would have spent more money in the monthly mortgage insurance than they would have had with the upfront mortgage insurance.  Simple math...  thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Jeff, great information, I'm glad I can get on here and get detailed posts about what is happening. And great comments too.

I will be looking for the rest of your piece.

Thanks

Posted by David O'Doherty, Clayton NC Homes, Raleigh, NC (Raleigh Realty Inc) over 9 years ago

Jeff .. thanks for the FHA loan information and keeping us informed. I have forwarded this post to agents in my office.

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate (Vision Quest Realty) over 9 years ago

Since I work with so many first time home buyers I have been wanting to post about the changes to FHA, but I have put it off since nothing concrete has come to the table.  I have made the mistake of being one of those who jumps to write about a new change and doesn't get it quite right.  No post until I see it in writing! Thank you for laying out the changes and addressing the need for responsible journalism.

Posted by Carolynn Santaniello (Seven Gables Real Estate) over 9 years ago

Jeff, I did read the whole thing on the HUD site but I like the way you break it down! Looking forward to your extended explanation.

Posted by Vanessa Stalets, REALTOR, Brentwood TN Homes, Real Estate (RE/MAX Elite) over 9 years ago

Jeff, thanks for the clarification particularly between rumor and fact.  It appears like many others FHA is trying to mediate their problems of the day by requiring their customers to pay more.

Posted by William Queen (William D. Queen, Real Estate Broker, Richmond, Virginia) over 9 years ago

Jeff, thanks for your thorough update as always.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) over 9 years ago

Jeff - thanks for all the details. We can always count on your to provide us with up to date info on FHA. Gonna link to this from my First Time Buyer blog. THANKS!

Jeff

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) over 9 years ago

Good blog, you just left out one critical fact, bank overlays, the banks determine their own acceptable credit score levels.  Good luck to a consumer with a 500 credit score trying to get a mortgage today. If you now of a bank with does that please let me know, so I can stop turning people away.

Posted by Mamie DiBella over 9 years ago

Jeff,

As always you are a great source for information and opinion worth reading.  These changes will probably lop off  another 5%- 10% of the potential borrowers.  It's another discussion whether or not the potential borrowers lost should get loans.

 

Posted by Lee Walsh, Executive Talent Scout for Mortgage Professionals (SecurityNational Mortgage) over 9 years ago

Good Job on the Post Jeff!

It's all about helping the consumer!

 

Posted by Ben Yost - 303-587-4297, FHA, VA, Conventional - Mortgage Loans in De (First Time Home Buyer, Mortgage Rates, Pre-Approval) over 9 years ago

Jeff,

I can tell you take pride in your industry.  This article was very well written and explained to people outside the mortgage industry.  My question to the Commissioner is how do we get the Real Estate Market to turn around when policies like these will not allow buyers to achieve their goals.

Good Work!

Posted by Perri Cauley (Mortgage Resource Plus, Inc.) over 9 years ago

Good post.  The FHA is basically bankrupt since they haven't figured out that making loans to people with lots of debt and practically no money isn't such a good idea.

Posted by Jim McCormack, Nashville Short Sale REALTOR - Stop Foreclosure (Nashville Short Sale Specialist - Jim McCormack - Edge Advantage Realty, LLC - 615-784-EDGE (3343)) over 9 years ago

thanks for the post! We are just beginning to see FHA loans work here in Estes Park, since the prices on entry level homes have softened a little, more are in the FHA range. Quite a different process than a cash sale... :-)

Posted by Lisa VonBargen, Estes Park Real Estate Photographer (Photography7522) over 9 years ago

Thanks for all the details. This will be really helpful for first time buyers!

Posted by Melissa Zavala, Broker, Escondido Real Estate, San Diego County (Broadpoint Properties) over 9 years ago

It is hard to buy with FHA around here.  The cash buyers and big downpayments swoop in and take all the homes.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 9 years ago

Thank you for setting the record straight.  It helps tremendously to hear it from someone "who is in the business" and not pasted off of the internet because someone thought that it would be an easy way to get AR points!

Posted by Martin Kalisker, Professional Standards & Legal Assistant (Greater Boston Association of REALTORS) over 9 years ago

I know they may just be rumours but I do not think the changes are over just yet

Posted by Gene perez (Greater Mortgage Solutions & Valley Hills Realty ) over 9 years ago

Thanks for the update and detail!

Posted by Kevin Hancock, The Hancock Mortgage Team (Evergreen Home Loans) over 9 years ago

Excellent post as usual, packed with solid information. I will spread the word an dre-blog. ~Rita

Posted by Brian Burke, Broker & Advising Expert-Denver Luxury Real Estate (Kenna Real Estate) over 9 years ago

Jeff - Thanks for the update and on how you presented it, with easy to understand examples.  May I re-blog?  (I'm not sure how to do that yet - you would be my first re-blog.)

Posted by Kimberly Thurm, Broker / Relocation Consultant ABR, CRS, GRI, SFR (Berkshire Hathaway HomeServices KoenigRubloff, Naperville, IL) over 9 years ago

This is such good information for us who continue to get bad info from some lenders who should know better.

Posted by Bernadine Hunter over 9 years ago

Thanks for all that info!

Posted by Michael Barrow, Realtor, San Diego CA Real Estate (Keller Williams Realty - San Diego Metro) over 9 years ago

Jeff,

Great post and as always, great information.

thanks,

Posted by Mark Warner (RealEspace) over 9 years ago

Jeff,

I always love the way you put this info out. I'm going to reblog this on my blog as well.

 

Thanks,

 

Andrew

Posted by Andrew Trevino, Wilkes-Barre Homes For Sale (ADT Real Estate) over 9 years ago
  1. I do not claim to have all the data, however, this is what has been presented to me thus far.
  2. So far they HAVE NOT raised the minimum payment from 3.5% to 5%....but there is a bill in congress that supports this change. There is no word on what kind of support this bill has, so for now…FHA is still 3.5%. This WILL NOT last, especially if the FHA foreclosure rate continues to rise. Count on it, unless things change.

 

  1. The biggest change is that the FHA upfront premium will jump from 1.75% of the base loan amount to 2.25% of the base loan amount. This is a big thing with borrowers. Even though they work this into the loan amount, it still sticks out like a sore thumb on the HUD AND its an added cost.
  2. What are your thoughts on this, sorry for the numbering problem, not sure what happened there, oops.

 


Posted by Deborah Grimaldi, (401) 837-9633 (Albert Realtors) over 9 years ago

Things have changed so much in 'Mortgage World', I'm glad there are people like you helping us stay up-to-date, and doing it responsibly not just posting the newest rumor.

Posted by Joetta Fort, Independent Broker, Homes Denver to Boulder (The DiGiorgio Group) over 9 years ago

Jeff,

Thanks for doing the leg work and laying it all on the line for us as professionals and for consumers who always need rock solid information.

Posted by Sabrina Kelley, Woodland Park Colorado Mountain Homes and Land (ERA Herman Group Real Estate) over 9 years ago

Jeff...just to clarify, are you saying folks with credit scores below 580 will need 10% down payment.

Posted by Richard Porzio (Denny Grimes & Company Inc.) over 9 years ago

First off, I have to admit I did not read every post above mine, so I hope I am not being redundant. I believe the seller concessions going from 6% to 3% are going to be a bigger deal than the new upfront MIP. If someone is buying a $125,000 home, then they need some concessions to cover their prepaids because they just don't have that much money (generalization). A small loan amount will eat up the 3% SC and this will mean more money out of the borrowers pocket at closing.

As far as the 580 score, I would not even waste my time trying to place that loan. I don't know of any lenders who will go that low. Just because FHA has a guideline does not mean that lenders are not being more strict than HUD.

Posted by Mark Towler (Southeast Mortgage) over 9 years ago

Jeff, my understanding is that these are proposed and will probably be implemented but will be posted to the Federal Registry in February and thereafter there will be a comment period and should become law in early summer.

Posted by Anonymous over 9 years ago

Agreeing with the post above: the 580 score loans just aren't there. We have one investor that will do them but the pricing is prohibitive (for good reason). It's our hope that the larger down payment requirement may bring more investors willing to do these since there's more skin in the game. But we're not holding our breaths!

Posted by Cari Anderson over 9 years ago

Jeff,

If that reduction in seller concession allowable doesn't get buyers off the fence nothing will!

Wendy

Posted by Wendy Rich-Soto, Realtor Strategize, Stage, Sell, Owner of SellingLASouthBay.com @ the WRichTeam (Keller Williams Realty, LA Harbor) over 9 years ago

 

FYI – I will get back to everyone’s comments by tonight and answer some questions that were asked…  keep in mind, the new Mortgagee Letter was released today and I will be writing a new blog on this tomorrow. It will be about how we might be able to make a change in regards to the possible seller concession change that has been mentioned.  This blog was based on what HUD released the day before, talking about the possible changes to come. thanks

 

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Great changes, and for the better.  I've never liked the 6% concessions as I don't believe buyers should be buying houses with no money, so I'm happy about the lowering of this amount.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) over 9 years ago

 

DAVID... . comment # 40... .  my pleasure and I am glad I can sometimes simplify things. I hope to have part 2 our by tomorrow with updates about these changes.  thanks

REBECCA.... . my pleasure and I hope it's useful to the other agents.

CAROLYNN.... . even this post could be expressed slightly as the cart before the horse. Even though HUD mentioned these changes, after today's mortgagee letter, a few things will be voted on after public commenting. But as I stated in this post, such changes would be made in the spring or early summer. I will explain some of these changes in detail tomorrow with some examples.. And yes, don't get me started about the media.   Hey all of you media outlets, I am pissed !!!  thanks

VANESSA.... . thank you very much.. I enjoyed breaking stuff down such as this... thanks

WILLIAM.... . my pleasure.. yes, it does feel that way.  And I have some food for thought to what has happened and why... and will be expressing my opinion about this tomorrow.  thanks

LYNN.... . my pleasure and thanks for the continued support.

JEFF..... . comment # 46... . my pleasure and thanks for the kudos in regards to putting this on your first time homebuyers site...

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Thanks for taking the time to blog about the changes. Your work is very much appreciated.

Posted by Jeff Colby, President/CEO (OmniQuest Media Labs - Obeo Distributor) over 9 years ago

Thanks for the "heads up" on all of this.  Looks like the first 6 months this year will be the time for sellers and buyers to make all the hay.  It seems like all the new FHA rules combined with the expiration of the tax credits this spring will have the market falling off a cliff the last half of this year ???!! 

Posted by Debbie Cook, Silver Spring and Takoma Park Maryland Real Estate (Long & Foster Real Estate, Inc) over 9 years ago

Really appreciate the information.  Looking forward to your next post.

Posted by Gary Pike (Better Homes and Gardens Real Estate Metro Brokers) over 9 years ago

I have used the points to get the rate down. My thinking is this provision will hurt in the long run.

 

 

Jerry Gray CRB,CRS,GRI,SFR / Allen Tate Realtors / Winston Salem, NC / 336-918-2433

Posted by Jerry Gray, Serving the Triad Since 1980 (Wilkinson ERA Real Estate) over 9 years ago

Jeff,

Thanks for the update. Very concise.

Posted by Bob Sweazy (Prudential A. S. de Movellan Real Estate) over 9 years ago

 

MAMIE... . comment # 47... . I plan on talking about this in my Part 2 section... and I did mention briefly bank overlays in this blog post or in a comment..  FHA loans rumors alert.. Overall, I will be writing in more detail about the lower credit scores also... if I don't have it done by Friday, it will be done for Saturday... thanks and thanks for the compliment.

LEE... aka the full service loan officer... . thank you very much for those kind words...  another 5 or 10%... not sure.. keep in mind, some of these changes are still not official... HUD will allow for public comments and debate on their registry....  hopefully we as a community will have an impact on this. I will be writing about this later today and give updates to when it is opened so we can comment.. thanks

BEN.... . thank you very much for the kind words... much appreciative.. and yes, it is. that is where my passion lies when writing these posts and just doing mortgages in general.. thanks

PERRI... . thank you ver much with respect your comment.. and how we can help. Please read my comment above you, to Lee...comment # 48... thanks and let's do this together. Stay tuned for my updates on this.

JAMES.... . comment # 51... . thanks for the compliment. I will though semi disagree about FHA making loans to people with debt and no money is not a good idea. They have been doing this since 1934... and it's the economy and unemployment. FHA is being hit hard for two reasons.... the increased volume of FHA loans in the last 2 years.. and I can debate that late in my detail.. about who is doing these loans... example.. people that use to focus on subprime loans... and secondly... that HUD should had made some of these changes sooner... but I will talk about this in my next 2 blogs... thasnks for you input.

LISA.... .  my pleasure... and yes, I have heard about this in other markets... why? for a few reasons... the increased loan amounts.. values dropping... and more FHA awareness from loan officers that where even afraid of FHA loans and more consumers hearing about them and or going to the right loan officers... that know all loan programs... thanks

MELISSA.... . my pleasure and I hope this helps more borrowers... 1st time buyers or not.. the real estate professional and yes, some loan officers.  thanks

GENE.... . comment # 55. ... . sorry to hear... but if you are selling homes like this, it shouldn't matter. But if sellers are only accepting offers with larger down payments,yes, this could hurt the first time home buyer that is relying on FHA and the minimum down.. even if that buyer is qualified..  this is where you and I come into play as professionals... explaining this in detail and educating everyone.. way too many assumptions still out there... thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Thanks for the information.

Posted by Richard Johnston (San Fernando Valley - RE/MAX Grand Central) over 9 years ago

As usual, great information Jeff... I look forward to the other posts to follow...

Posted by Paul Silver, Rhode Island full service real estate firm over 9 years ago

Thank you for taking the time to post.  Its very helpful.

Posted by Lisa Marie Flenoury, "Lisa The Broker" - Making Dreams Come True ("Lisa The Broker") over 9 years ago

Jeff - Thanks for the summary I liked it so much, I reblogged it.

Posted by Larry Brewer - Benchmark Realty llc (Benchmark Realty LLc) over 9 years ago

Thanks for keeping us updated!

Posted by Beverly Femia, Broker Realtor Stager - Greater Wilmington, NC Are (BlueCoast Realty Corporation) over 9 years ago

thanks 4 the warning

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