Just a quick hit today as things are obviously vewry busy right now...
Yesterday the trigger that started the run was two-fold; Feb retail sales were stronger than thought then in the afternoon the FOC policy statement was the preverbal straw. There was a growing thought that the Fed would launch another easing move to increase buying of treasuries and MBSs; the FOMC said no, not yet. The economic outlook according to the Fed had improved somewhat from the previous FOMC meeting. The stock market has continued to increase taking another support from the bond market. Meanwhile in Europe there are still huge debt issues but at the same time (at least at the moment) that its economy while in recession may not be as serious as markets had believed.
Wednesday, March 14, 2012
Saturday, March 10, 2012
Big Changes to FHA loans...MUST READ!!!
Changes in FHA loans that begin with all new case numbers assigned on or after April 1st (this is not an April Fools joke!)
- The Up Front Mortgage Insurance premium is increased from 1% to 1.75%. This means for every $100,000 that you borrow, your loan amount will be $750 higher than it would have been prior to April 1st. At current rates, this equates to a payment that is higher by about $3.47 per month for every 100K borrowed.
- Monthly PMI (Private Mortgage insurance) is also increasing April 1st. The annual PMI on a 30 year FHA loan is increasing from 1.15 basis points to 1.25 basis points. This means for every 100K you borrow, your monthly PMI payment is now $8.34 per month higher than FHA loans prior to April 1st.
This means if you are financing a $200,000 loan on FHA terms for 30 years, your payment after April 1st will be $23.62 per month higher than if you buy (or lock in) before April 1st. That is almost $300 per year. This can, and will make a difference in buyer perception of FHA loans, as well as the buyer ability to qualify regarding debt to income ratios.
....BUT THE BIGGEST NEWS.....FHA mortgagee letter 2012-3, which can be found here: http://portal.hud.gov/hudportal/documents/huddoc?id=12-03ml.pdf
If a buyer has more than $1,000 in collection accounts (aggregate total), those collection accounts must either be paid in full at closing with the borrowers own funds, OR the buyer must enter into a payment program and the lender must document 3 months payment history. Those payment plan debts must also be added into debt to income ratios.
This news is HUGE and we expect it to impact and disallow qualifying on up to 30% of current FHA loan applicants towards the lower end of the FHA credit requirements. FHA loans were designed for individuals with more of a bruised credit profile, and this will have a major impact on FHA business. At a time when the housing market is showing signs of life, and all politicians agree that we need housing to help get us out of the recession, we are hit with this. It makes no sense to do this at the current time, but yet here we are.
REALTORS...PLEASE MAKE SURE THAT YOUR BUYERS ARE GETTING PRE-APPROVED FROM KNOWLEDGEABLE, QUALIFIED LENDING PROFESSIONALS. If you have any questions please do not hesitate to call us.
Adam Simmons
Owner
Crystal Clear Mortgage, LLC
15320 Hwy 105 W Suite 206
Montgomery, TX 77356
936-447-5626 direct
888-634-6911 toll free
www.CrystalClearMortgage.com
Friday, March 9, 2012
FHA just got more expensive!!!
Pay up is FHA’s new message
March 09, 2012 11:30AM
By Kenneth R. Harney
If you’re considering buying a house with an Federal Housing Administration mortgage and expect the seller to help out with your closing costs, here’s a heads-up: FHA plans to impose significant restrictions on the amount of money sellers can contribute at settlements in the near future. On top of that, FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchasers across the board.
You might ask: Why hit us with additional financial burdens right now, just as housing is showing modest signs of recovery in many areas, and the spring buying season is getting under way?
One big reason why: Over the past six years, FHA has been the turnaround champ of residential real estate, offering down payments as low as 3.5 percent despite the recession and housing bust, growing its market share from 3 percent to 25 percent-plus. The program is now financing 40 percent or more of all new home purchases in some metropolitan areas and is a crucial resource for first-time buyers and moderate-income families, especially minorities. With a maximum loan limit of $729,750 in high-cost areas, it is also a force in some of the country’s most expensive markets — California, Washington, D.C., New York and parts of New England.
But during the same span of rapid growth, FHA’s insurance fund capital reserves have steadily deteriorated — far below congressionally mandated levels. Delinquencies have been increasing. According to the latest quarterly survey by the Mortgage Bankers Association, FHA delinquencies rose to 12.4 percent compared with a 4.1 percent average for prime (Fannie Mae-Freddie Mac) conventional fixed-rate mortgages and 6.6 percent for VA loans.
As a result, FHA is under the gun — from Congress and from within the Obama administration — to get its own house in order, cut insurance claims and rebuild its reserves. The upcoming squeezes on seller contributions and bumps in premiums are steps in this direction, but may not be the last.
The seller-contribution cutbacks could be painful, particularly in areas of the country where closing costs and home prices are relatively high. Here’s what’s involved: Traditionally FHA has been uniquely generous in allowing home sellers — including builders marketing new construction — to sweeten the pot for purchasers by chipping in money to defray closing costs. FHA currently allows sellers to pay up to 6 percent of the price of the house toward their buyers’ settlement expenses. Fannie Mae and Freddie Mac, by comparison, cap contributions at 3 percent. VA’s ceiling is 4 percent
Under newly proposed rules, the FHA cap would drop to the greater of 3 percent of the home price or $6,000. In sales involving houses priced at $100,000 or below, this wouldn’t change anything ($6,000 equals 6 percent of $100,000). But on all sales above this threshold, the squeeze would get progressively tighter. On a $200,000 home, a buyer could today ask the seller to pay for $12,000 of a long list of settlement charges including all prepaid loan expenses, discount points on the loan, interest rate buy-downs and upfront FHA insurance premiums, among others. Under the proposed cutback, the maximum amount would be slashed in half. On many home transactions, the reductions would force sellers to lower their prices to enable cash-short buyers to get through the closing. In other cases, sales might simply be too far of a stretch for some purchasers.
The proposed cuts are open to public comment through the end of this month, but are highly likely to be adopted in much the same form soon afterward. FHA also is restricting the types of “closing costs” that sellers can pay. Six months’ or a year’s worth of interest payments or homeowner association dues in advance no longer will be permitted — a serious blow to many builders who use these as financial carrots.
Beyond these changes, FHA also plans significant increases in insurance premiums — from 1 percent to 1.75 percent on its upfront premiums, effective April 1, and annual premiums by 0.1 percent on all loans under $625,000 and 0.35 percent on mortgage amounts above that, effective June 1.
William McCue, president of McCue Mortgage in New Britain, Conn., which does a sizable percentage of its business with FHA, said the cumulative impact of all these increases “will not just crowd first-time buyers out of the FHA market. It will prevent them from owning a home that absent these new costs would be affordable.”
Bottom line: Nail down your FHA money and seller-contribution negotiations as soon as you can because later looks a lot more expensive.
Crystal Clear Mortgage
www.CrystalClearMortgage.com
888-634-6911
March 09, 2012 11:30AM
By Kenneth R. Harney
If you’re considering buying a house with an Federal Housing Administration mortgage and expect the seller to help out with your closing costs, here’s a heads-up: FHA plans to impose significant restrictions on the amount of money sellers can contribute at settlements in the near future. On top of that, FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchasers across the board.
You might ask: Why hit us with additional financial burdens right now, just as housing is showing modest signs of recovery in many areas, and the spring buying season is getting under way?
One big reason why: Over the past six years, FHA has been the turnaround champ of residential real estate, offering down payments as low as 3.5 percent despite the recession and housing bust, growing its market share from 3 percent to 25 percent-plus. The program is now financing 40 percent or more of all new home purchases in some metropolitan areas and is a crucial resource for first-time buyers and moderate-income families, especially minorities. With a maximum loan limit of $729,750 in high-cost areas, it is also a force in some of the country’s most expensive markets — California, Washington, D.C., New York and parts of New England.
But during the same span of rapid growth, FHA’s insurance fund capital reserves have steadily deteriorated — far below congressionally mandated levels. Delinquencies have been increasing. According to the latest quarterly survey by the Mortgage Bankers Association, FHA delinquencies rose to 12.4 percent compared with a 4.1 percent average for prime (Fannie Mae-Freddie Mac) conventional fixed-rate mortgages and 6.6 percent for VA loans.
As a result, FHA is under the gun — from Congress and from within the Obama administration — to get its own house in order, cut insurance claims and rebuild its reserves. The upcoming squeezes on seller contributions and bumps in premiums are steps in this direction, but may not be the last.
The seller-contribution cutbacks could be painful, particularly in areas of the country where closing costs and home prices are relatively high. Here’s what’s involved: Traditionally FHA has been uniquely generous in allowing home sellers — including builders marketing new construction — to sweeten the pot for purchasers by chipping in money to defray closing costs. FHA currently allows sellers to pay up to 6 percent of the price of the house toward their buyers’ settlement expenses. Fannie Mae and Freddie Mac, by comparison, cap contributions at 3 percent. VA’s ceiling is 4 percent
Under newly proposed rules, the FHA cap would drop to the greater of 3 percent of the home price or $6,000. In sales involving houses priced at $100,000 or below, this wouldn’t change anything ($6,000 equals 6 percent of $100,000). But on all sales above this threshold, the squeeze would get progressively tighter. On a $200,000 home, a buyer could today ask the seller to pay for $12,000 of a long list of settlement charges including all prepaid loan expenses, discount points on the loan, interest rate buy-downs and upfront FHA insurance premiums, among others. Under the proposed cutback, the maximum amount would be slashed in half. On many home transactions, the reductions would force sellers to lower their prices to enable cash-short buyers to get through the closing. In other cases, sales might simply be too far of a stretch for some purchasers.
The proposed cuts are open to public comment through the end of this month, but are highly likely to be adopted in much the same form soon afterward. FHA also is restricting the types of “closing costs” that sellers can pay. Six months’ or a year’s worth of interest payments or homeowner association dues in advance no longer will be permitted — a serious blow to many builders who use these as financial carrots.
Beyond these changes, FHA also plans significant increases in insurance premiums — from 1 percent to 1.75 percent on its upfront premiums, effective April 1, and annual premiums by 0.1 percent on all loans under $625,000 and 0.35 percent on mortgage amounts above that, effective June 1.
William McCue, president of McCue Mortgage in New Britain, Conn., which does a sizable percentage of its business with FHA, said the cumulative impact of all these increases “will not just crowd first-time buyers out of the FHA market. It will prevent them from owning a home that absent these new costs would be affordable.”
Bottom line: Nail down your FHA money and seller-contribution negotiations as soon as you can because later looks a lot more expensive.
Crystal Clear Mortgage
www.CrystalClearMortgage.com
888-634-6911
Subscribe to:
Posts (Atom)
