New FHA Home Mortgage Rules
FHA home loans
Today, the Federal Housing Administration (FHA) issues apprx. 40% of home mortgages. On April 5, the FHA Up-Front Mortgage insurance premium increase goes into effect. The FHA is raising up its upfront mortgage insurance premium to 2.25 percent from 1.75 percent, boosting the minimum down payment to 10 percent for borrowers with a credit score of 580 and below (it stays at 3.5 percent for everyone else), and reducing permissible seller concessions from 6 percent to 2 percent.
Federal Housing Administration (FHA) In Trouble
FHA home mortgage defaults
With recent reports that 20% of mortgages guaranteed by the Federal Housing Administration (FHA) in 2007 and 2008 are defaulting, it appears that the corner of the carpet that things are being swept under might have changed but that the sweeping is still going on. Proof that lessons were not learned is shown by similar default rates for the period of 2005-2006 (20%) when the bubble seemed to have gained its own inertia and was sucking mortgages in instead of having to have them pumped out.
In addition to the losses tied to the eventual defaults on the mortgages it guaranteed, the FHA is also suffering from mortgages it invested in. Write downs on $1.04BN in the value of private-label MBS, the kind not backed by any GSE, resulted in the booking of a $165MM loss on these types of securities by the FHA in 3Q09; a veritable one-two punch that will, once again, have the taxpayer being dragged from the ring.
Sorrento Valley real estate agent
Real Estate – An Innovative Way of Not Filing Bankruptcy
The Federal Housing Administration announced FHASecure, a temporary initiative to permit lenders to refinance delinquent adjustable rate mortgages (ARMs) and/or to offer new subordinate financing where the combined loan-to-value ratio exceeds the applicable FHA loan-to-value ratio and geographical maximum mortgage amount.
The FHASecure Eligibility Criteria
Borrowers Current on Their Mortgages
The mortgage being refinanced must be a non-FHA fixed rate or adjustable rate mortgage. Cash out refinances are not acceptable.
If there is insufficient equity in the home, FHA will insure first mortgages where there is a:
1) Write Down. The existing note holder(s) writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage (a short pay-off); or
2) New Subordinate Financing. The FHA-approved lender making the new mortgage, the existing note holder or other interested party may take back a second lien by the amount which the payoff is short, including closing costs, arrearages, other reasonable and customary costs that are standard servicing practices and are included in all payoff statements or previous secondary financing if the indebtedness exceeds FHA prescribed LTV and maximum mortgage amount limits; and/or
3) Re-subordination/Modification. The note holder(s) of existing subordinate financing must re-subordinate or modify the existing subordinate lien(s) and re-execute at closing if the lien is to remain in effect after closing.
Borrowers Delinquent on Their Mortgages
How FHASecure Can Help:
The borrower's payment history shows no more than one 60-day late payment or two 30-day late payments.
If the borrower is unable to meet the payment history requirements specified above, the lender may still proceed with the refinance transaction provided that the loan-to-value ratio on the new FHA-insured mortgage does not exceed 90 percent and the borrower has no more than one 90-day late or no more than three 30-day late payments over the 12 month period prior to the rate reset or extenuating circumstance.
An Innovative Way of Not Filing Bankruptcy
****Resources of FHASecure can be located at www.hud.gov