Jeff Rickard

     It appears that we will be able to go to $362,790 on FHA loans without a price hit.  The FHA increased limit for most of the front range is now $406,250.  So, if you are over the $362,790 you will experience increased cost to get that loan.  That cost is still undetermined but best guess is that it will be between 2.5 - 4 points.  WOW! 

     There are new loan limits for FHA as part of the economic stimulus package offered by Washington.  This is big news because FHA is a 3% down payment loan and at this point they are not really changing down payment requirements due to the declining market.   The limits in the front range will increase from $308,370 to $406,250.  The limits are different by cities and counties but the $406,250 represents most of the front range.  Boulder is at $460,00 and Eagle County is $729,750.

     There is a big “however” though, which is just because the government announced it does not mean the investors and mortgage companies are prepared to offer it.  We anticipate that we will have investor support by next week but we also anticipate (rumors from investors themselves) that there will be price hits for the increased loan amounts.  In other words it will not be regular FHA pricing it will be increased interest rates.  

Thanks for nothing!  Sometimes the government does stuff to help us and sometimes they do stuff so that we think they are helping us.  FHA Secure falls in the latter category.  To date nationally FHA has only done approximately 400 true FHA Secure loans.  Remember this was suppose to help us all out of our loan crisis issue.  A great plan that just does not work in the real world.  To make matters worse the FHA website is telling us all what a great program FHA Secure is and that they have done thousands of loans.  What they have done is thousands of FHA cash out refis.  That is great but nothing new and certainly not FHA Secure.  For more detail on FHA Secure read my post from November 21st. 

  The last time I reported on coming changes I was expecting some movement in early December, that seems unlikely at this time due to “holds” put on the FHA legislation by several Senators.  Their actions prevented the legislation from being on a “fast track” but it appears that at least the “holds”will be lifted this week or next. 

     Identical provisions in the House bill and the Senate bill are raising the mortgage limit floor from 48% to 65% of GSE limit ($271,000), making condo approval processing easier, increasing the maximum loan limits for reverse mortgages to $417,000 and allowing reverse mortgages to be used for home purchases.  Since it is in both bills they should approve these changes.

     Different provisions in the House and Senate bills are as follows: 

Down payment - Senate wants current 3% to be reduced to 1.5%, House wants 0% down payment or 100% financing.  Senate probably wins this one so we expect 1.5% down payment.

Mortgage limits in high cost areas,  Senate wants to raise from $308,370 to $417,000.  House wants to go to $729,000 (yeah baby!)  Senate will probably win this too but may have to go to about $500,000. 

Seller funded down payment assistance - Senate hates it, House loves it.  Too close to call.

     FHASecure is a refinancing option that gives credit-worthy homeowners, who were making timely mortgage payments before their adjustable rate loans reset but are now in default, a second chance with an FHA insured loan.

     This program is one of the responses that the government came up with for our huge national foreclosure problem.  On the surface it sounds very good but in reality we are having a difficult time getting any done.  There are parts of the program that sound great in theory but the reality is very different………..maybe? Continue Reading »

I have spent the last three months educating Realtors and the public through classes, websites, and this blog on the return of FHA. I have been telling everyone that if you are working with a loan officer or Realtor that has come into the business in the last 5 years, then most likely they’ve never done an FHA loan or had an FHA loan be part of their real estate transaction.

I have warned that if you do not know FHA in this market that you are at a competitive disadvantage. So why am I now warning you against new FHA loan officers? Because of a new FHA Alert that addresses brokers who were not FHA approved giving the impression that they are. They are giving their loans to an FHA approved ‘buddy’ who closes it and then gives a kick back to the broker. Is that the FHA “knowledgeable” lender you want to work with?

Now that is only part of the problem. The other half of this is that many brokers are moving en mass to FHA approved lenders to get jobs. Now if someone wants to move to new employers and better themselves I am more than fine with that.  What I am not fine with is that they come to work on Monday and by Tuesday they are on the street saying that they are FHA experts.

In today’s market, where the smallest hiccup is causing a deal not to close, it is imperative that you use an experienced FHA loan officer who works at a company that has experienced FHA underwriters and processors.

With higher risk loan types known as C, B, and Alt-A gone or going the old standard is back in style; FHA. The interesting part of this is that if you are a loan officer or a realtor who as come into the business in the last five years you may have never done or been involved with an FHA loan.

A loan product that had a lion’s share of the business several years ago almost disappeared for the last five years. So why is it back? There are many reasons, here are the top 7:

1. It is a non FICO score driven program, so lower scores still have a hope of getting financing. A solid credit explanation letter can help an underwriter understand a credit glitch.
2. Non-occupant co-borrower is allowed. Mom and Dad, or other family members, can co-sign on your loan if you are short of qualifying income.
3. 100% of the down-payment, closing costs and pre-paids can be a gift.
4. If you qualify for down payment assistance from approved sources you can get 100% financing.
5. If you are buying a home that needs work you can do an FHA 203(k) loan and finance the purchase and repairs in one loan.
6. You get a loan that is traditionally much more conservative than C,B or Alt-A loans and there is no prepayment penalties.

7. If you lack credit history, even no FICO scores, we can use non-traditional sources of credit to qualify.

FHA is a great option and maybe the only option for awhile, so take the time to find an FHA approved lender.