Oct 23 2007
Washington Update - Legislative Forecast
Market events in the coming weeks will have significant impact on the prospects for any new legislation. If there is more bad news, the odds of legislation increase. On the FHA front, it appears to be more a question of when and not if.
FHA bill should be enacted around December 1st to raise the mortgage limit in “high cost” areas to $417,000. It could be raised higher to possibly $500,000 or more if problems persist for jumbo loans.
Mortgage insurance tax deductibility looks like it will be extended for another 7 years until 2013.
Risk based pricing for mortgage insurance will be enacted.
The termination of seller funded down payment assistance was effective October 1st. The only exception was for Nehemiah that did get a 6 month extension because of an agreement they reached with HUD over litigation in 1999.
There is a 50/50 chance that we could see GSE conforming mortgage limits increase from $417,000 to $600,000 or $650,000.
Downpayment Assistance Rule:
FHA will issue official guidance regarding implementation of the regulation regarding a mortgagor’s cash investment. In the interim, to address the questions raised by many industry partners, FHA is providing the following information:
1. Nehemiah Corporation of America, due to a previous Settlement Agreement and as discussed in the rule, is granted relief from the effective date of the rule until April 1, 2008.
2. HUD has agreed to grant the AmeriDream Downpayment Assistance Program relief from the effective date of the rule until February 29, 2008.
3. All other similar downpayment assistance providers have not been granted relief from the effective date of the rule, which is October 31, 2007.
Provided that the homebuyer has entered into a contract of sale (including any amendments to purchase price) on or before October 31, 2007, FHA will recognize the gift if made to the homebuyer and properly documented as an acceptable source of the downpayment.
To read the final rule in its entirety and for more information please visit: http://hudclips.org/sub_nonhud/cgi/pdf/4846a.pdf
HUD was ordered today by a Federal Judge to Hold the implementation of FR5087 which would have eliminated seller-assisted Down Payment Assistance on FHA loans. As it stands currently, the validity of the rule will ultimately be decided in court.