Refinance before June 3rd to avoid FHA rule changes
Thinking about refinancing your existing mortgage, or taking out a new one? Don’t delay, or it could cost you. Some Federal Housing Administration (FHA) changes involving tighter lending standards and higher mortgage insurance premiums already took effect on April 1st, while others are on the way – and these changes could make a dent in your wallet.
So what’s prompting these changes? They come in the wake of the FHA’s Mutual Mortgage Insurance Fund – which is used to fund homeowner programs – announcing a deficit of over $16.3 billion for fiscal year 2013. Read More.
FHA loans pricier on April 1, MI changes coming
The Federal Housing Administration starting charging borrowers higher mortgage insurance premiums on new FHA loans at the beginning of April.
The annual fee on most FHA loans increased by 0.1 percent April 1. While it may sound small, this is one of a series of mortgage insurance hikes the FHA has implemented over the years. The fee has nearly tripled since 2008. Mortgage insurance changes will be starting in June as well. Read More.
FHA revokes controversial credit dispute rule
The Federal Housing Administration has decided to rescind a rule that would have made it tougher for borrowers with credit disputes on their records to qualify for an FHA-backed mortgage. The rule had been widely criticized by the lending and real estate industry as shutting out too many potential borrowers from qualifying for a mortgage.
The new rule originally took effect April 1 but then was postponed a week later until July 1 as the FHA further reviewed the policy change.
The guideline would have required borrowers who wanted to qualify for an FHA-insured mortgage to pay off any credit dispute in their history of more than $1,000 or set up a documented payment plan on any unpaid collection accounts. Read More.
The state of FHA reserves
There’s been considerable interest in the media in FHA’s financial position. The agency recently announced several increases to the premiums it charges borrowers to have their mortgage guaranteed by the agency. Those increases, along with some reports that FHA might request federal funds to shore up its reserves, make it seem like the agency is navigating a rocky period.
On the premium increases, the 0.10 percent hike that takes effect April 1 is mandated by law as part of the bill Congress passed at the end of 2011 to extend the payroll tax vacation. That bill required an increase in the guarantee fee that Fannie Mae and Freddie Mac charge banks for guaranteeing loans. Congress included the FHA increase in the bill, too, at least in part to create parity with Fannie and Freddie, NAR analysts say. Read More.
Congress restores FHA loan limits, extends NFIP
The U.S. House and Senate restored FHA loan limits to the level they were at before they were allowed to expire at the end of September. As a result, the limits will rise to 125 percent of the area median home price from 115 percent, up to a maximum $729,750 from $625,500. NAR estimates that several hundred counties where FHA loan limits fell at the end of September will now rise back up to the previous level.
“The reinstated loan limits will help provide much needed liquidity and stability to communities nationwide as tight credit restrictions continue to prevent some qualified buyers from becoming home owners and the housing market recovery remains fragile,” said NAR President Moe Veissi in a statement released last night.
The funding bill also extends the National Flood Insurance Program (NFIP) until Dec. 16 to allow lawmakers time to consider long-term authorization of that program, which is an NAR priority. Read More.
HUD offers REO homes for $100 down in select states
HUD has approved a program aimed at putting foreclosed homes back into the hands of owner-occupant buyers. In select states, Kentucky, Indiana and Tennessee included, from now into October of next year, buyers need a down payment of only $100 to purchase a HUD-owned REO home.
There are qualifications for the buyer. The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price. Read More.
Loan limits expire but hope still remains
Even though Congress failed to extend the FHA and GSE mortgage loan limits by Oct. 1 and those limits declined in 669 counties in 42 states, including 16 counties in KY for FHA loans, there is still hope for the future. The Senate voted this past Thursday to attach a proposal to a spending bill that could restore the size of loans the government buys or insures to a maximum mortgage amount of $729,750 in many markets. The Senate voted 60-38 on the spending bill (note: both KY Senators voted no). It’s expected to go before the House later this year.
The higher conforming loan limits expired at the end of September, reverting to a maximum amount of $625,500, despite mass calls from the industry that doing so could potentially weaken the housing market, particularly in high-priced areas. The new limits will be equal to 115% of local area median home price (down from 125%). Read More.
Mortgage relief for unemployed homeowners
The federal government announced adjustments to Federal Housing Administration (FHA) requirements that will require servicers to extend the forbearance period for unemployed homeowners to 12 months. The Administration also intends to require servicers participating in the Making Home Affordable Program (MHA) to extend the minimum forbearance period to 12 months wherever possible under regulator and investor guidelines.
These adjustments will provide much needed assistance for unemployed homeowners trying to stay in their homes while seeking re-employment. These changes are intended to set a standard for the mortgage industry to provide more robust assistance to unemployed homeowners in the economic downturn. Read More.
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