FHA Loans and FHA Mortgages

FHA loans will no longer have mortgage insurance premiums based on a combination of loan-to-value ratios and credit scores. This actually starts today, October 1, 2008, and rescinds Mortgagee Letter 2008-16. This is for all FHA mortgages that have FHA case number assignments as of today.

So, what does this mean?  Well, we won’t have a chart of like 18 different options, which was tedious at times, depending on the borrowers credit scores. It’s now pretty simple and basic.

Overall, this is in effect through September 30th, 2009. It will be revisted prior to that to decide whether changes should be made, depending on the mortgage insurance pool & if it lost monies.Changes will be effective at the beginning of the fiscal year. FHA’s fiscal year begins 10/1 and ends 9/30.

Upfront Mortgage Premiums :  FHA loans will have an upfront premium in an amount equal to the following percentages of the mortgage as listed below :  (these are all applied to the base loan amount)

  –  Purchase money mortgages & Full-credit qualifying refinances = 1.75 percent

  –  Streamline refinances (all types)  =  1.50 percent

  –  FHA Secure (not sure about the new FHA Hope Program)  = 3.00 percent

Annual Premiums : (these are monthly mortgage insurance - MMI)  Below is a chart to show the difference between the LTV (loan to value) and the term of the mortgage.

Highlights regarding FHA’s Mortgage Insurance Premiums :

  –  All FHA loans to borrowers with a credit score must be risk-classified by FHA’s Total Mortgage Scorecard.

  –  Those borrowers with credit scores below 500 and with a LTV ratio equal to or above 90 percent are not eligible for FHA-insured mortgage financing.

  –  Borrowers without credit scores will need to be manually underwritten based on the credit criteria described in Mortgagee Letter 2008-11.

  –  Eligibility for delinquent mortgagors under the FHA Secure initiative is described in full in Mortgagee Letter 2008-13.

** FYI – In the previous Upfront Mortgage Insurance Premiums that were determined in Mortgagee Letter 2008-16, first-time homebuyers were allowed to take a HUD approved counseling course to reduce their upfront mortgage insurance. Since the new premiums are in effect now with 1 kind of percentage, this does not apply now. **

Overall, it is extremely important for all loan officers and lenders to read Mortgagee Letter 2008-22, because there are 5 pages of new rules and guidelines. What I listed here were the basics of the new changes. The mortgagee letter also talks about the defining of the “decision credit score", if you have multiple borrowers, about non-traditional credit, and the underwriting rules when using FHA’s total mortgage scorecard. That last section is very detailed and very important.

For your FHA mortgage needs, please don’t hesitate to contact me.

FHA Loan changes for 2008 - 2009

Part 1 - Down Payment Assistance Programs

Part 2 - Upfront Mortgage Insurance Premiums

Part 3 - Down payment and Maximum Mortgage Requirements

- FHA Loans - FHA Mortgages - Conventional Loans - VA Loans -

Experience & Knowledge at its BEST !!! 

Are you ready for some more changes in the mortgage industry? Many of us know that there has been a lot of change, both with FHA loans and conventional loans. And the changes that I am about to mention have already been out there for about a month now, but this is more of a refresher post of information. These are changes that will start to take place next week and up until January 1st, 2009.

Is change good?  Yes and no…..  The first major change as of right now is that down payment assistance programs will be discontinued for now. As you noticed, I said discontinued and not banned.  HUD and the government wanted to ban these programs, more so because of HUD’s misleading figures. This is something that I have proof of and that I will write about in the next few days. Hence why I went to Washington D.C. to help keep the DPA programs alive. For more info, please read:

Mr. Belonger Goes To Washington!  By Patricia Kennedy

Video : Down payment assistance rally - 9/10/08 -  with Jeff Belonger

As of now, there are some gentleman handshakes on the table between Congressman Barney Frank and the rest of the Senate in regards to bringing back these down payment assistance programs. Right now, they end on October 1st, 2008. But with the help of so many individuals such as you and me, and Scott Syphax of Nehemiah, the DPA’s should be back by the end of the year. (this is my opinion)

What will the new DPA look like and what is being talked about? Some other things that HUD supports as a compromise to bill HR 6694 are :

  –  Borrowers with a credit score above 680 will be allowed to participate in these down payment assistance programs with no penalties.

  –  Borrowers with credit scores from 620 to 679 could be subject to higher insurance premiums. (I personally wouldn’t have a problem with this)

  –  Borrowers with credit scores below 620 would be banned from using the down payment assistance program until mid 2009. ( I truly think that we could improve on this one. First off, why down to 620?  Secondly, even people with credit scores of 570 or such can still have decent credit, under FHA’s credit guidelines.  I would think 600 would be a good place to start. And I will share some of the facts with charts in another post in the next several days. These are from outside sources that aren’t connected with HUD & FHA.

FHA Loan changes for 2008 - 2009

Part 1 - Down Payment Assistance Programs

Part 2 - Upfront Mortgage Insurance Premiums

Part 3 - Down payment and Maximum Mortgage Requirements

- FHA Loans - FHA Mortgages - Conventional Loans - VA Loans -

Experience & Knowledge at its BEST !!!

  The Constitution of the United States of America

“We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”

 The source of this preamble was found here : http://www.law.cornell.edu/constitution/constitution.preamble.html

Politics at its best… right?  I really don’t like to talk about politics and religion. But I needed to voice my opinion because there has been to much finger pointing and accusations.  I am also tired of how we can’t get along on Capital Hill. It’s either the Democrats fault or the Republicans fault.  The Republicans come up with a plan or good idea, yet the Democrats shoot it down, even if it would help our economy. Now, this goes on from both sides. But how about the real proof, so the general public can make its own mind up and not with these slandering remarks. What about those individuals that are to firm and true to their political parties and not the truth. Are we that naive?  Stupid?  What happened to common sense?  Please, someone explain this to me before we slide into the shitter, a deep, dark hole. Or is that right around the corner or has happened??

Overall, I have read many blogs in the last week about this sp-called bailout. I held off on this for one main reason. It wasn’t finalized as of yet. So many people complaining about this and that…. and for what?  Congress is in an emergency session now, to see what they can scrape together. My opinion?  I have a few…. but Norma Toering said it best here…..  Life Goes On…..

This is not the time to panic. Yes, easier said than done.  But what I mentioned above, “We the People"…. or is it “we the (our) pocket books"??  This is not funny, yet beyond serious.  I am also tired of how the media keeps playing this down, talking about doom and gloom. I was born with a brain and common sense. I have seen this coming for more than 2 years and talked about it in here, regarding a recession.

Let’s look at some proof…. Who is at the top of the list for high payouts in regards to Fannie Mae and Freddie Mac??  How about Chris Dodd and Barack Obama to name a few. And again, I am not here to attack a specific political party. But it does make you wonder, those that have cried and those that have been the loudest crucifying others.

What about going back the last 10 years to see the real problems that got us to the point that we are at now?  Yes, this can be debated…it’s just my knowledgeable opinion.

SOLUTIONS…...   gee, this could be a longer list than what I gave Santa Clause when I was 5 years while looking at the kids section of a Sears catalog. 

But what about starting at the top?  As I mentioned, I really tried to stay away from any blogs or anything written in the paper about the proposed “bailout” until now. There was a part of me that didn’t want it to happen. Yes, shoot me. In some sense, we need to let the market correct itself. But we do need some help now.

I will say this, Lenn Harley wrote a very well written post on this topic. The Loss of Consumer Credit.  She stated … “WALL STREET vs. MAIN STREET"   

Because of my comment, Lenn made this reply. “The consumer pays over and over for credit impairment.  The Wall Street executive is PAID for his failure.”

Solution # 1 ….. How about those that knowingly made false statements, reports, cooked the books, etc, etc, just to make sure that they received their bonuses based on performance. How about going after the companies that handle the accounting for such major banks and lenders that also knew about this. Yes, this is starting to happen a little on Wall Street.  But how come it’s not front page news? How about those CEOs and CFOs and the million dollar bonuses?  Why is the Enron crisis being repeated again? Why can’t we learn from these mistakes?  What will it take?  Because of the news that this plan was not approved, the stock market lost over 700 points. Do I hear panic?  Again, we need solid solutions….

#2??  Keeping more paying jobs in the U.S., and not selling our soles overseas for cheaper labor. Yes, they have been working on tax breaks for years, but it just doesn’t seem to happen.

#3…. How about using our resources and produce more oil and gas locally?  Yes, this has been talked about, but why now?  Why not 10 years ago?  20 years ago?  Why do we have to wait until it’s an issue or crisis?

If this is the time to be United…  to stand up for what we believe in…  and to put our political indifferences aside, this is the time to do it.  NOW… We don’t need another 9/11 to be united and we surely don’t need a financial crisis. But the second part is a little to late. So, again, let’s start at the top and also look at the last decade, which in my opinion, has created a large part of this mess.

- FHA Loans - FHA Mortgages - Conventional Loans - VA Loans -

Experience & Knowledge at its BEST !!!