New FHA Home Loan Changes

• In January, the Department of Housing and Urban Development (HUD) instituted a one-year moratorium on the FHA’s 90 day anti-flipping rule. As a result, beginning Feb. 1, buyers could use FHA-insured financing to purchase properties resold though private developers and investors, providing access to a broader array of recently foreclosed properties. Under the temporary waiver, all transactions must be arms length, and most properties will require additional documentation or improvements and justification of the price increase. Additional documentation may include a second appraisal and a property inspection ordered by the lender.
• FHA loans come with mortgage insurance, regardless of the down payment, for at least five years, and the premium drops off only when the loan amount hits 78 percent of the purchase price. The Upfront Mortgage Insurance Premium was raised in January from 1.78 percent of the loan amount to 2.25 percent, starting April 5, 2010.
• Three to eight month’s worth of property taxes are collected at closing, depending on the month of closing, to set up a mandatory impound account for property taxes.
• The minimum down payment requires is 3.5 percent, which can be fully gifted from help from friends and family.
• New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers will less than a 580 FICO scored will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.                                         San Diego estate planning lawyers