FHA Rule Changes

The Federal Housing Administration (FHA) announced this morning a few key changes to what they will require of homebuyers looking for an FHA-insured mortgage. The basics:

- An increase in Upfront MIP from 1.75 percent to 2.25 percent
- A reduction in maximum seller contributions from 6 percent to 3 percent
- A Congressional request to increase monthly mortgage insurance premiums

Here is a good summary of the changes by Dan Green:

FHA Rulebook Changes : Higher Fees, Bigger Downpayments, And More Mortgage Insurance | The Mortgage Reports

Here is the official statement from the U.S. Department of Housing and Urban Development (HUD):

FHA Announces Policy Changes To Address Risk And Strengthen Finances | HUD

-Tom

HUD Takes Action to Speed Resale of Foreclosed Properties to New Owners

No more 90-day seasoning for FHA financing with a few conditions to combat obvious flips:

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS

In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties.

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

* All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
* In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
* The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

-Tom

Link: HUD Takes Action to Speed Resale of Foreclosed Properties to New Owners | HUD.gov

CoStar's Most Read Phoenix Real Estate Stories of 2009‏

Real estate research organization CoStar has published a list of thier most popular stories for the Phoenix real estate market in 2009. CoStar focuses on commercial and investment properties, so the articles aren't really about the residential market or the mortgage market, but they're still good if you want to read about other aspects of the Phoenix market.

-Tom

Link: Most Read Phoenix Real Estate Stories of 2009‏ | CoStar

Mortgage Rates in Review…and a Look Ahead

Interest rates in review for 2009, and a look at what may happen in 2010:

Looking back on 2009, it appears that the average 30-year fixed mortgage rate was on a roller coaster ride. The rate dipped below 5.0% for much of January, then it spiked up and down during the spring before taking a long drop to a near all-time low of 4.56% on November 30th.

-Tom

Link: Mortgage Rates in Review…and a Look Ahead | Mortgages Unzipped

2B/2B Condo for Rent, 16th Street and Campbell, $795/mo

I have a good friend who is looking for a tenant for his condo at 16th Street and Campbell – 2 bedroom 2 bath for $795/month. Here are the details and some pictures (click on the images for larger view).

-Tom

Extraordinary find minutes to central Phoenix. Beautifully remodeled 2 bedroom / 2 bath unit, newer carpet & paint, lighting fixtures, ceiling fan, newer appliances and newer tile in living areas and baths. Spacious eating area. Large private covered 23x12 outdoor patio/room. Unit faces the pool. Loads of storage! Close to all amenities including the 51 freeway, restaurants, shopping, and minutes to the Metro Light Rail station. Hurry! This one won't last!

Utilities include water/sewer, and gas! Tenant responsible for electric and cable.
Small pets will be considered.
Non-smoking only.
Recent credit report required.
Security deposit and cleaning deposit required.

1622 East Campbell Ave, Phoenix, AZ 85016

Call Jim @ 480-612-1880

New FHA Guidelines for Condo Market

HUD released new temporary and permanent guideline changes for condos – as stated in this article, it is VERY IMPORTANT that condo communities do everything they can to get FHA approval in 2010. Here some of the changes:

TEMPORARY GUIDELINE CHANGES

- Owner occupied units is being decreased from 50% to 30%. This means only 30% of the units need to be occupied by the homeowner and the rest can be rented. This is easily the biggest change.
- FHA concentration is increased from 30% to 50% with a provision that can be as high as 100% . FHA concentration is the percentage of homes in the complex that can have FHA financing.
- Vacant and tenant occupied units do not count as rentals in the owner occupancy calculation. This is crucial because HUD used to count vacant units as rentals. These units are to be removed from the calculation all together. For example, if a project has 50 units and 2 are vacant, the project would need to 30% of the 48 occupied units to be occupied by the homeowners and not renters. For communities that have many vacant units, this is very helpful.
- One-year waiting period for condo conversions is eliminated.

PERMANENT GUIDELINE CHANGES

- Owner occupied units will increase to 50% from 30%.
- FHA concentration will decrease to 30% from 50%.
- One-year waiting period for condo conversions remains eliminated.
- Homeowners must obtain HO-6 Walls-in insurance.

-Tom

Link: New FHA Guidelines Could Change the Condo Market Forever Part II | Mortgages Unzipped

Check Your Credit Long Before Applying for a Mortgage

A common mistake many borrowers encounter is not knowing their credit score right up until the time the apply for a mortgage – amazingly, this happens with 95% of the people I work with. Here is a good piece regarding the importance of staying up-to-date with your credit score:

Banks and mortgage lenders will not only charge you a higher interest rate for having a lower credit score, but you could be flat-out denied if your credit isn’t up to snuff.

Additionally, your interest rate may be bumped up several times as a result of a less-than-perfect credit score, depending on the nature of your home loan.

-Tom

Link: Check Your Credit Long Before Applying for a Mortgage | Mortgages Unzipped

See also:

Credit Report Errors Can Hamper Your Home Loan | Mortgages Unzipped

Soon You’ll Know if Your Credit Score Bumped Up Your Mortgage Rate | Mortgages Unzipped