There are significant changes taking place with all FHA Streamline refinance transactions. The new guideline will read, "At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced and 12 months seasoning in the subject property." This is a very minor change from the previous guideline.
HUD Mortgagee Letter 2009-48 modifies FHA’s requirements for second appraisals (as described in Mortgagee Letter 2008-09), eliminating the need for a second appraisal on high balance loans in declining markets. This policy is extended to cash-out refinances that exceed $417,000 and is secured by a property located in a declining market. This change is effective immediately and actually favors the homeowner.
FHA will retain the second appraisal policy described in Mortgagee letter 2006-14, Property Flipping Prohibition Amendment. This policy requires a second appraisal when a property is resold between 91 and 180 days following acquisition by the seller, if the resale price is 100 percent (or more) higher than the price paid by the seller when the property was acquired. CLC must obtain a second appraisal from another appraiser and the cost of the second appraisal may not be charged to the homebuyer.
For example, if a property is resold for $80,000 within six months of the seller’s acquisition of that property for $40,000, the mortgage lender must obtain a second independent appraisal supporting the $80,000 sales price. The mortgage lender may also provide documentation showing the costs and extent of rehabilitation that went into the property as support for the increased value but must still obtain the second appraisal.
Showing posts with label FHA. Show all posts
Showing posts with label FHA. Show all posts
Wednesday, November 25, 2009
Monday, November 23, 2009
FHA Financing For Condos
The recent Mortgagee Letter from HUD is going to impact the availability of purchase money for condos. In theory the new guidelines are supposed to make the process easier. At first glance I thought it would be (see post July 30), until I read the entire publication.
The item that alarmed me the most is the Recertification Process. All of the condos on the existing approved list will be moved a new list that requires recertification every two years. This is a big change.
Consider the unlucky buyer that purchases a condo under this system and finances it using an FHA loan. Three years later they try to sell it and the project is no longer approved unless someone has recertified the entire project. This could have a huge impact on values. It is possible a homebuyer could close on a loan today and the same loan would not be available for a new buyer tomorrow. A loan on the exact same condo may require only 3.5% down payment one day and then require 10% down the next. That difference would eliminate many buyers and that impacts value.
Here is something to consider, there are 322 projects in Kentucky on the existing approved list. This means someone will need to recertify 13+ projects per month, or roughly 3 per week - and do it for FREE??? Good luck with that.
The item that alarmed me the most is the Recertification Process. All of the condos on the existing approved list will be moved a new list that requires recertification every two years. This is a big change.
Consider the unlucky buyer that purchases a condo under this system and finances it using an FHA loan. Three years later they try to sell it and the project is no longer approved unless someone has recertified the entire project. This could have a huge impact on values. It is possible a homebuyer could close on a loan today and the same loan would not be available for a new buyer tomorrow. A loan on the exact same condo may require only 3.5% down payment one day and then require 10% down the next. That difference would eliminate many buyers and that impacts value.
Here is something to consider, there are 322 projects in Kentucky on the existing approved list. This means someone will need to recertify 13+ projects per month, or roughly 3 per week - and do it for FREE??? Good luck with that.
Monday, July 20, 2009
FHA Making Financing Easier for Condos
Another change is taking place in the mortgage arena. A recent HUD letter to lenders is shifting more responsibility to lenders regarding financing condominiums, at least that is how I read it. I was alarmed today when I heard one of our wholesalers will stop accepting FHA spot approvals next Friday. Up to now lenders were able to approve a condo for FHA insurance when it was located in a project that was not approved by FHA. That process is being eliminated.
Of course that sounded bad to me. Just another option eliminated. But then I actually read the letter, and it does not sound bad at all. In fact it sounds good. Lenders are going to be able to approve the entire project instead of just one unit. There will be limitations, no more than 1/3 of the project can be financed using FHA, but it is a big move in the right direction. Thousands of additional condos in the Louisville area could now be eligible for maximum FHA financing. AAAhhhh, folks that could make your condo worth more!!!
You can read the letter for yourself: Click here
Of course that sounded bad to me. Just another option eliminated. But then I actually read the letter, and it does not sound bad at all. In fact it sounds good. Lenders are going to be able to approve the entire project instead of just one unit. There will be limitations, no more than 1/3 of the project can be financed using FHA, but it is a big move in the right direction. Thousands of additional condos in the Louisville area could now be eligible for maximum FHA financing. AAAhhhh, folks that could make your condo worth more!!!
You can read the letter for yourself: Click here
Thursday, July 16, 2009
Deadline Fast Approaching - $8,000 First-Time Home Buyer Tax Credit
I realize all of the counters posted on the web show 137 days left until the deadline. While that is true it does not take in to consideration the amount of time necessary to find a property, make all of the arrangements and actually “buy” a home. I have helped hundreds of people purchase their first home, and usually they move very slowly compared to those that have been through the process a couple of times.
The entire procedure can take from 30 to 45 days for well informed and experienced home buyers. Add a couple weeks to that for buyers that are new to the process and the deadline to get started is about 60 days from now!!!
The First-Time Home Buyer needs to have a home selected, under contract and financing in the works by November 1st to be safe. It simply takes time for inspections, repairs if necessary, appraisal and title work.
There are many things you can do to stream line the process. Save all of your pay stubs and bank statements from this point forward. Keep all of the pages for every bank statement, one page missing and the underwriters are not allowed to accept that statement for documentation. A simple mistake like a missing page can add a couple of days to the processing period. There is no grace period for the Tax Credit (yet). November 30 falls on a Monday this year and if you have not closed by the end of the day then on Tuesday your name is Trout and you are out!!!
Another tip, any deposit on the bank statements you provide that exceeds your pay check will be questioned. Keep copies of everything if you sell a big ticket item like a car, make a copy of the transfer, the check, your deposit slip, etc.
If you are using an FHA loan to finance the purchase you will need a copy of the FHA Amendatory Clause signed and dated on or before the date the sale contracted is accepted. The tricky part is it must be signed by everyone, buyers, sellers and Realtors. I posted a blank copy of this form on my Application Web Site in the resource section under forms. Apply for a loan while you are there, would love to help. http://JamesSimms.com
The entire procedure can take from 30 to 45 days for well informed and experienced home buyers. Add a couple weeks to that for buyers that are new to the process and the deadline to get started is about 60 days from now!!!
The First-Time Home Buyer needs to have a home selected, under contract and financing in the works by November 1st to be safe. It simply takes time for inspections, repairs if necessary, appraisal and title work.
There are many things you can do to stream line the process. Save all of your pay stubs and bank statements from this point forward. Keep all of the pages for every bank statement, one page missing and the underwriters are not allowed to accept that statement for documentation. A simple mistake like a missing page can add a couple of days to the processing period. There is no grace period for the Tax Credit (yet). November 30 falls on a Monday this year and if you have not closed by the end of the day then on Tuesday your name is Trout and you are out!!!
Another tip, any deposit on the bank statements you provide that exceeds your pay check will be questioned. Keep copies of everything if you sell a big ticket item like a car, make a copy of the transfer, the check, your deposit slip, etc.
If you are using an FHA loan to finance the purchase you will need a copy of the FHA Amendatory Clause signed and dated on or before the date the sale contracted is accepted. The tricky part is it must be signed by everyone, buyers, sellers and Realtors. I posted a blank copy of this form on my Application Web Site in the resource section under forms. Apply for a loan while you are there, would love to help. http://JamesSimms.com
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