January 21st, 2010 categories: Mortgages
There are some changes coming in the FHA requirements that are worth noting. The Federal Housing Administration has been under pressure recently due to higher defaults and falling reserves. To be clear, you should know that the FHA doesn’t actually lend money to home buyers, but insures lenders against default of loans that meet FHA requirements.
To help shore up their reserves, FHA is increasing its upfront insurance premium fee to 2.25% (up from 1.75%). It has also asked congress to increase the annual insurance fee it receives from borrowers. These changes will take effect this spring.
To guard against defaults, the FHA will be raising the minimum down payment on borrowers with credit scores less than 580 to 10% of the purchase price (currently 3.5%). This won’t effect the majority of FHA borrowers as fewer than 1% of those borrowers last year had a credit score under 580 (according to LPS Applied Analytics).
Also, the amount of seller paid closing costs will be reduced from 6% to 3% of the purchase price.
Both the 10% down payment and the seller paid closing cost cap will go into effect this summer.
While all of these new provisions will make it a tad more difficult for lenders to push some new borrowers through underwriting, the majority of buyers will be unaffected by everything except for the higher insurance premium.
As always, leave any questions or observations in the comments below.
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January 8th, 2009 categories: Mortgages
A lender I’ve worked with in the past sent me the following yesterday afternoon regarding Fannie Mae and Freddie Mac’s change in how appraisals will be ordered:
Fannie Mae and Freddie Mac Change the Appraisal Process
Freddie Mac and Fannie Mae will implement a revised Home Valuation Code of Conduct beginning May 1, 2009. In an attempt to increase the reliability of appraisals, the revised code builds on existing seller-servicer guidelines and will apply to lenders that sell single-family mortgage loans to Fannie Mae and Freddie Mac.
One major difference in the code is that lenders will be required to order appraisals from one central clearing house, which will in turn select an appraiser. The down side of such a process is that lenders will have little to no communication with the appraiser, which means there won’t be an opportunity to have a discussion or touch base with appraisers before they go out to appraise the house. The new code is intended to help assure that borrowers, home buyers and secondary mortgage market investors receive fair and independent property valuations.
In some areas, lenders have already implemented these changes, and in the next few weeks and months, more will have to begin the process.
I understand the reasoning behind it is to ensure there is no behind-the-scenes talking between the lender and the appraiser to influence the appraiser’s final price valuation, but all this is going to end up doing is increase the length of time it takes to close on a home (as well as probably raise appraisal prices because of lack of competition). I vote a big no for this one.
Additional Resources:
Federal Housing Finance Agency’s News Release
Federal Housing Finance Agency’s Home Valuation Code of Conduct
Check out our new Map Based Search of Homes for Sale in Minnesota
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December 15th, 2008 categories: Mortgages
Bond and home loan rates rallied late Friday to reach their best levels in years! While I’m not normally a rate watcher, and definitely not a guy to tell people ‘Now is the time to buy!’ ; I think there is some opportunity to ride this rate dip and do one of two things.
1. Those that were on the fence, really serious about buying, but waiting for the right time may be in the perfect position to get a house at a steep December discount with a great rate attached to it.
2. Those hoping to ride the housing prices out a little while longer before deciding to sell can refi to make it much more palatable during the next year or two. Now, when refinancing, you always have to consider closing costs to make sure it makes sense, but something to definitely look into.
If you need any help in finding a good mortgage broker, I can always deliver a few suggestions that clients of mine have used in the past.
Those of you in Minnesota, stay warm and stay safe!
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November 20th, 2008 categories: Mortgages
Fannie Mae has just issued a press release letting it be known that they have ordered their loan servicers and attorneys to suspend any and all foreclosures scheduled from next week to the end of the year in homes that are owner occupied. This is being done while Fannie figures out how to implement a better loan modification program with all of its loan servicers. This should help out with inventory numbers in early 2009.
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