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Help your clients move from renting to owning. Your clients may be able to own a home for not much more than they're paying in rent. Check the chart below to see how quickly rent payments can add up. Maybe it's time for your clients to invest that money in something that lasts - a home of their own. Time is running out for the 1st time home buyer tax credit, so they must act now.
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Monday, February 22
Help your clients move from renting to owning.
Friday, February 19
Wednesday, February 17
Bankruptcy time frames for FHA
Here are the rules regarding previous bankruptcies’ impact for a new FHA loan ($271,050 max loan amount) .
What are the credit re-establishment requirements my borrower must meet if they have had a foreclosure or bankruptcy and they want to do an FHA loan?
Bankruptcies
(Chapter 7) Fully discharged at least 2 years
Schedule of debtors and discharge forms unless credit report provides discharge date
The borrower must have re-established good credit or chosen not to incur new credit obligations. The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs.
No delinquent credit after bankruptcy
Detailed credit explanation
(Chapter 13) 1 full year timely payments made
Trustee approved
No delinquencies
Detailed credit explanation
Foreclosures / Deed in Lieu Released at least 3 years
Detailed credit explanation
What are the credit re-establishment requirements my borrower must meet if they have had a foreclosure or bankruptcy and they want to do an FHA loan?
Bankruptcies
(Chapter 7) Fully discharged at least 2 years
Schedule of debtors and discharge forms unless credit report provides discharge date
The borrower must have re-established good credit or chosen not to incur new credit obligations. The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs.
No delinquent credit after bankruptcy
Detailed credit explanation
(Chapter 13) 1 full year timely payments made
Trustee approved
No delinquencies
Detailed credit explanation
Foreclosures / Deed in Lieu Released at least 3 years
Detailed credit explanation
FHA ANNOUNCES POLICY CHANGES TO ADDRESS RISK AND STRENGTHEN FINANCES
New measures will help FHA better manage risk, while maintaining support for the housing market and access for undeserved communities.
WASHINGTON — Federal Housing Administration (FHA) Commissioner David Stevens announces a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for undeserved communities. These changes are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the housing market recovery.
The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement.
“Striking the right balance between managing the FHA’s risk, continuing to provide access to undeserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for undeserved communities.”
ANNOUNCED FHA POLICY CHANGES Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending. The first step will be to raise the up-front MIP by 5 bps to 2.25% and request legislative authority to increase the maximum annual MIP that FHA can charge. If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP. 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. The initial up-front increase is included in a Mortgagee Letter released January 21st and will go into effect in the spring. Update the combination of FICO scores and down payments for new borrowers. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well. 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. Reduce allowable seller concessions from 6% to 3%. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions. 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. Increase enforcement on FHA lenders. Publicly report lender performance rankings to complement currently available Neighborhood Watch data; will be available on the HUD website February 1. This is an operational change to make information more user-friendly and hold mortgage lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
Enhance monitoring of lender performance and compliance with FHA guidelines and standards. Implement Credit Watch termination through lender underwriting ID in addition to originating ID. Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process. This change is included in a Mortgagee Letter released January 21st and is effective immediately. Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer. HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes: Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they would originate and underwrite. Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches.
In addition to the changes proposed, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.
HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation’s fair housing laws.
More information about HUD and its programs is available on the internet at www.hud.gov and espanol.hud.gov.
U.S. Department of Housing and Urban Development 451 7th Street S.W., Washington, DC 20410 Telephone: (202) 708-1112 TTY: (202) 708-1455
WASHINGTON — Federal Housing Administration (FHA) Commissioner David Stevens announces a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for undeserved communities. These changes are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the housing market recovery.
The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement.
“Striking the right balance between managing the FHA’s risk, continuing to provide access to undeserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for undeserved communities.”
ANNOUNCED FHA POLICY CHANGES Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending. The first step will be to raise the up-front MIP by 5 bps to 2.25% and request legislative authority to increase the maximum annual MIP that FHA can charge. If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP. 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. The initial up-front increase is included in a Mortgagee Letter released January 21st and will go into effect in the spring. Update the combination of FICO scores and down payments for new borrowers. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well. 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. Reduce allowable seller concessions from 6% to 3%. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions. 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. Increase enforcement on FHA lenders. Publicly report lender performance rankings to complement currently available Neighborhood Watch data; will be available on the HUD website February 1. This is an operational change to make information more user-friendly and hold mortgage lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
Enhance monitoring of lender performance and compliance with FHA guidelines and standards. Implement Credit Watch termination through lender underwriting ID in addition to originating ID. Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process. This change is included in a Mortgagee Letter released January 21st and is effective immediately. Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer. HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes: Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they would originate and underwrite. Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches.
In addition to the changes proposed, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.
HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation’s fair housing laws.
More information about HUD and its programs is available on the internet at www.hud.gov and espanol.hud.gov.
U.S. Department of Housing and Urban Development 451 7th Street S.W., Washington, DC 20410 Telephone: (202) 708-1112 TTY: (202) 708-1455
Friday, February 5
Economic news
Economic news was mostly positive this past week except for housing. Both existing home sales and new home sales dropped sharply in December. Existing home sales plunged 16.7% to a seasonally adjusted annual rate of 5.45 million, from 6.54 million in November. The decline is the largest on record. However, December sales were up 15% compared with December 2008. New home sales in December fell 7.6% and were down 22.9% for the year. Both drops in existing and new home sales appear to be the cause of the first time homebuyer tax credits taking sales away in later months.
Consumer confidence beat estimates and rose to its highest level since September 2008. The index improved in January to 55.9 from 53.6 in December. The present situation assessment, however, continues to remain near historic lows. Consumer sentiment also improved in January to 74.4 from 72.5 in December. This is the highest reading since January 2008. On Wednesday, the FOMC left rates unchanged and maintained its view that conditions “are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The biggest news of the statement was that Kansas City Fed President dissented, preferring that the Fed drop the “extended period” language. Hoenig sees the economy and financial markets improved enough that exceptionally low rates are not needed for long.
On Thursday, December durable goods orders were softer than expected but ex transports were a touch better than expected. Also, Bernanke was confirmed with a 70-30 confirmation vote. It was the poorest showing ever by a nominee for Fed Chairman but was still a victory for Bernanke. And on Friday, fourth quarter GDP grew at a much higher than expected rate of 5.7%. This was the strongest growth rate in more than six years. About two-thirds of the growth however, was boosted by smaller inventory reductions. Overall, the report shows that the economy is in moderate recovery.
Although much of the economic data was positive, equities were down for the week. For the month of January, the Dow was down 3.5%; the S&P, down 3.7%; the Nasdaq, down 5.4%; and the Russell, down 3.7%. Treasury yields were little changed net for the week.
Have a great weekend
Consumer confidence beat estimates and rose to its highest level since September 2008. The index improved in January to 55.9 from 53.6 in December. The present situation assessment, however, continues to remain near historic lows. Consumer sentiment also improved in January to 74.4 from 72.5 in December. This is the highest reading since January 2008. On Wednesday, the FOMC left rates unchanged and maintained its view that conditions “are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The biggest news of the statement was that Kansas City Fed President dissented, preferring that the Fed drop the “extended period” language. Hoenig sees the economy and financial markets improved enough that exceptionally low rates are not needed for long.
On Thursday, December durable goods orders were softer than expected but ex transports were a touch better than expected. Also, Bernanke was confirmed with a 70-30 confirmation vote. It was the poorest showing ever by a nominee for Fed Chairman but was still a victory for Bernanke. And on Friday, fourth quarter GDP grew at a much higher than expected rate of 5.7%. This was the strongest growth rate in more than six years. About two-thirds of the growth however, was boosted by smaller inventory reductions. Overall, the report shows that the economy is in moderate recovery.
Although much of the economic data was positive, equities were down for the week. For the month of January, the Dow was down 3.5%; the S&P, down 3.7%; the Nasdaq, down 5.4%; and the Russell, down 3.7%. Treasury yields were little changed net for the week.
Have a great weekend
Wednesday, February 3
86 Days to get $8,000 Tax Credit - Today's Actual Rate Indicator
Rates based on $150,0000 loan amount, excellent credit, closing in 30 days.
Program Rate APR
FHA 30 Yr. 4.875% 4.897%
VA 30 Yr. 4.75% 4.769%
USDA 30 Yr. 5.125% 5.144%
Conf. 30 Yr. 4.875% 4.896%
Conf. 15 Yr. 4.25% 4.287%
Conf. 5/1 ARM 3.875% 3.49%
Program Rate APR
FHA 30 Yr. 4.875% 4.897%
VA 30 Yr. 4.75% 4.769%
USDA 30 Yr. 5.125% 5.144%
Conf. 30 Yr. 4.875% 4.896%
Conf. 15 Yr. 4.25% 4.287%
Conf. 5/1 ARM 3.875% 3.49%
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