FHA Loans May Become A Lot More Costly Soon

So…you are looking to buy a home in 2013 and are considering using a FHA mortgage for financing…don’t delay, because that FHA mortgage could end up costing more very soon.

HR 4264 or The Fiscal Solvency Act of 2012 is a bill that has overwhelmingly passed the House and is on its way to the Senate.  This bill among other things grants FHA the power to raise its mortgage insurance premiums to as high as 2.05% annually — nearly twice the 1.20% rate most FHA-Insured homeowners pay today.

Continue reading “FHA Loans May Become A Lot More Costly Soon

Streamline Your FHA Mortgage; St Louis Mortgage Interest Rate Update

The Federal Housing Administration (FHA) has lowered mortgage insurance premiums on Streamline Refinance transactions. It will now be it easier for borrowers to take advantage of record low interest rates and save money each month.  Under this program, up-front mortgage insurance premiums will be reduced to 0.01 percent of the total loan amount for borrowers with FHA loans made before June 1, 2009. In addition, the annual MIP will be cut to 0.55 percent.  This streamlined refinance program is available to borrowers who are current on their FHA mortgage and may qualify even if they owe more than their homes are worth…no appraisal required.

For more information about this program,contact me by clicking below.

ask-the-expert Continue reading “Streamline Your FHA Mortgage; St Louis Mortgage Interest Rate Update

Low Interest Rates and Tougher Underwriting Standards; St. Louis Mortgage Interest Rate Update

I continue to hear in the news about incredible low interest rates, but the catch is getting approved for a mortgage loan, either for a purchase or refinance.  The process is getting harder and harder.  In this tighter credit environment, FHA remains to be a great alternative for buyers with limited resources for a down payment and closing costs or past credit problems.  Underwriting guidelines are more lenient than conventional guidelines.

Highlights of FHA financing: Continue reading “Low Interest Rates and Tougher Underwriting Standards; St. Louis Mortgage Interest Rate Update

FHA Financing is Great Alternative; St. Louis Mortgage Interest Rate Update

FHA remains to be a great alternative for buyers with limited resources for a down payment and closing costs or past credit problems. Underwriting guidelines are more lenient than conventional guidelines. Continue reading “FHA Financing is Great Alternative; St. Louis Mortgage Interest Rate Update

St Louis Mortgage Rate Update; FHA Lowers Mortgage Insurance Premiums for loans endorsed before June 1, 2009

The Federal Housing Administration has announced plans to lower mortgage insurance premiums making it easier for borrowers to take advantage of the current record low interest rates.

Under this program, up-front mortgage insurance premiums will be reduced from 1.75%  percent to 0.01 percent of the total loan amount for borrowers with FHA loans made before June 1, 2009. In addition, annual fees will be cut to 0.55 percent from 1.25 percent. This streamlined refinance program is available to borrowers who are current on their payments and may qualify even if they owe more than their homes are worth. Continue reading “St Louis Mortgage Rate Update; FHA Lowers Mortgage Insurance Premiums for loans endorsed before June 1, 2009

Lending Tree says FHA’s change in guidelines may increase mortgage rates

Texas, Washington and New York Have Lowest Interest Rates in the Country

st-louis-realtor-dennis-norman-fha-increases-ratesAccording to the LendingTree Monthly Mortgage Review, average mortgage rates inched up in March, with more borrowers than ever taking advantage of low Federal Housing Administration (FHA) loan rates which averaged just 3.85 percent on a 30 year loan, almost 1/2 of one percent less than a conventional mortgage. However, according to the report, this may change soon as a result of the FHA adjusting its loan program guidelines and insurance premium structure which will cause the cost of a loan for future FHA borrowers to most likely increase. Continue reading “Lending Tree says FHA’s change in guidelines may increase mortgage rates

St. Louis Mortgage Rate Update; Mortgage Insurance Premiums Increase for FHA Loans

Acting FHA Commissioner Carol Galante recently announced a new premium structure for FHA-insured single family mortgage loans.  FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent .   Upfront premiums (UFMIP) will also increase by 0.75 percent.

 

“After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the Continue reading “St. Louis Mortgage Rate Update; Mortgage Insurance Premiums Increase for FHA Loans

George Washington University Study Finds That FHA Loan Limits Are Too High

Dennis Norman St Louis

“FHA still could serve 95 percent of its historic targeted market even if the maximum FHA loan limits were reduced by nearly 50 percent.”

Last week, George Washington University released a report, “FHA Assessment Report: The Role and Reform of the Federal Housing Administration in a Recovering U. S. Housing Market,” in which it revealed that the Federal Housing Administration’s (FHA) current loan limits are larger than necessary to serve its targeted market of first-time and low to moderate income borrowers. The study finds that the Obama Administration’s current proposal to reduce the higher end of FHA’s loan limits would have a small impact on its current market share and that larger changes are needed as FHA phases out its recent role as lender of last resort. Continue reading “George Washington University Study Finds That FHA Loan Limits Are Too High

Mortgage Relief and Foreclosure Moratorium for Missouri Homeowners Impacted by Recent Storms

Dennis Norman St LouisSpring storms in April caused 8 areas of the U.S. to be declared a National Disaster area, and another 9 more so far in May.  As a result of tornadoes, severe storms and flooding on April 19th, five counties in Missouri, Butler County, Mississippi County, New Madrid County, Saint Louis County, and Taney County, were declared a National Disaster areas on May 9th, making homeowners eligible for assistance, including possible mortgage payment relief and/or protection from foreclosure.  Continue reading “Mortgage Relief and Foreclosure Moratorium for Missouri Homeowners Impacted by Recent Storms

FHA Condominium Recertification Requirements

Yesterday my wife received a letter from the condo association for a complex she owns a rental in with “OWNER ALERT!!!!!!!” (yes, that many exclamation points) at the top of it in big letters. The reason for the “alert” was to let condo owners know that FHA certification for this condominium complex expired December 31, 2010 (as it did for many complexes across the country) and that, in order to be eligible for FHA-insured financing the complex would have to obtain re-certification.

Now, in this particular case, the board is using this as a scare tactic to try to convince the owners to vote to change by-laws to prohibit rentals (something they tried last year and failed at and something I have major issues with, but that’s a topic for another story..) but I realized this is a very real problem or concern for many condo-owners, boards and associations across the country so I thought I would gather and share some info on the issue. Continue reading “FHA Condominium Recertification Requirements

FHA Extends ‘Anti-Flipping Waiver’

The Federal Housing Administration (FHA) announced the temporary waiver of the “anti-flipping” rule has been extended through December 31, 2011. In my opinion the “anti-flipping” rule was a bad idea to start with and in the current housing market the last thing we need is anything to discourage investors from buying homes so this is a good move by FHA.

Continue reading “FHA Extends ‘Anti-Flipping Waiver’

Is The Government Going to Push Us Into Another Housing Bust?

Dennis Norman

UPDATE June 21, 2010- I said I would update this post after the proposed rules were published on the Federal Register with info on how to submit a comment -If you would like to comment, see the comment instructions in the Federal Register (I highlighted them) by clicking here -end of update.

June 4, 2010

Are they really going to repeat the same mistakes that helped cause this housing recession?

I say this because of a release I received from the Federal Housing Finance Agency (FHFA) last week announcing that the FHFA “has sent to the Federal Register a proposed rule implementing provisions of the Housing and Economic Recovery Act of 2008 (HERA) that establish a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve very low-, low- and moderate-income families in three specified underserved markets — manufactured housing, affordable housing preservation, and rural markets.” While the statement is a little ambiguous on the surface it sounds like a nice thought, “serve the underserved.”

However, as I read on I couldn’t believe my eyes as I read other aspects of the proposed rule. The “Enterprises” (Fannie and Freddie) would be required to take actions to “improve the distribution of investment capital available for mortgage financing for underserved markets” and are expected to continue their support for affordable housing (again, something that sounds great, just depends how you plan to go about supporting “affordable housing”). The rule would establish a method to evaluate the Enterprises performance in these underserved markets for 2010 and subsequent years. Of the four criteria the enterprises are to be evaluated under, one really got my attention; “the development of loan products, more flexible underwriting guidelines, and other innovative approaches to providing financing“. WHAT?? More FLEXIBLE underwriting, INNOVATIVE approaches to provide financing? Isn’t this the stuff that got Fannie Mae and Freddie Mac (not to mention thousands of homeowners) in trouble to start with? Now, I don’t claim to be an economist or even that smart for that matter, but this sure appears to me to be the Federal Government putting pressure on Fannie Mae and Freddie Mac to make loans they shouldn’t be making….again.

I’m not saying that the pressure on Fannie Mae and Freddie Mac to make loans to borrowers that weren’t really qualified is the only cause of the housing bust as there were many contributors to it, but this was certainly one of them and definitely a large part of what led to their financial demise and need for a tax-payer bailout.

A book I’ve read that I think has the most complete and thorough analysis of what caused the housing market to have it’s longest positive run only to be followed by a collapse is Thomas Sowells’ “The Housing Boom and Bust“. In his book Mr. Sowell says this about the housing bust and the demise of Fannie Mae and Freddie Mac; “in reality, government agencies not only approved the more lax standards for mortgage loan applicants, government officials were in fact the driving force behind the loosening of mortgage loan requirements.” So is this deja vu or what?

Mr. Sowell goes on to say “the development of lax lending standards, both by banks and by Fannie Mae and Freddie Mac standing behind the banks, came not from a lack of government regulation and oversight, but precisely as a result of government regulation and oversight, directed toward the politically popular goal of more ‘home ownership’ through “affordable housing,” especially for low-income home buyers. These lax lending standards were the foundation for a house of cards that was ready to collapse with a relatively small nudge.”

Correct me if I’m wrong, but it appears to me the government has opened the deck of cards and begun construction again.

There will be a 45 day period for public comments once the proposed rule is published in the Federal Register. I just tried to access the website site and it is down so I don’t know if it’s published yet but will check again and update this post with info on how to comment on the rule if you like.

 

FHA Reform Bill Passed by House; Good News for Homebuyers

Dennis Norman

Yesterday the U.S. House of Representatives passed H.R. 5072, the FHA Reform Act of 2010 which is good news for home-buyers that may need to rely upon an FHA loan for a home purchase. The bill will still need to be passed by the Senate and then signed into law by the President, but a big first step toward this was taken by the House passing it.

Highlights of the bill that I think are important to home-buyers are:

  • The down-payment requirement for FHA loans will remain at 3.5 percent. There was an amendment to the bill that would have increased the down-payment requirement to 5 percent but was defeated, leaving the down-payment requirement at the present 3.5 percent level. The National Association of REALTORS estimated that, if the down-payment was increased to 5 percent, there would be 300,000 potential home-buyers removed from the market as a result.
  • FHA will lower it’s up-front fee it charges borrowers for FHA mortgage insurance to 1 percent but will increase the annual premium they charge (which is added on to the payment) to 0.85 percent. This will help borrowers by lowering the up-front “out of pocket” expenses they incur, but will help FHA’s financial stability by increasing overall revenue from the premiums.
  • FHA’s loan limits will be increased for multifamily elevator buildings and in extremely high-cost areas, thus opening up the option of FHA financing in more markets.

The bill had almost unanimous support in the House, with 406 representatives voting for the bill and only 4 against, so I would expect it should have strong support in the Senate as well. Oh, curious who voted against it? Here’s the list:

FHA Offers Alternative For Underwater Homeowners

Dennis Norman

Last week HUD announced changes to FHA home loan programs to provide refinancing options to homeowners who owe more than their home is worth. Under FHA’s new plan, existing underwater homeowners can refinance their existing non-FHA loan into a FHA loan as long as they are current on their loan and their current lender reduces their total mortgage debt by at least 10 percent of the loan amount.

The total mortgage amount for the borrower after refinancing cannot be greater than 115 percent of the current value of the home, bring the loan amount for an underwater borrower closer to the actual value of their home. I don’t believe this program is actually in effect yet, but it should be within the next few months.

Program highlights:

  • Existing loan must not be FHA-insured
  • Esiting lender must agree to writedown the principal loan balance a minimum of 10 percent and the final loan amount cannot exceed 115 percent of the current value of the home (including and second mortgages). The refinanced FHA loan cannot be greater than 97.75 percent of the value of the home.
  • The refinanced FHA loan will be on standard FHA terms
  • Existing lenders can retain second mortgages on the property, but only up to a combined 115 percent of the current value of the home.

Homeowner Eligibility:

  • Homeowners must be current on thier mortgage payments
  • Homeowner must occupy the home as their primary residence
  • Homeowners must qualify for new FHA loan under standard FHA borrower guidelines
  • Homeowners must have a FICO credit score of at least 500

I will write more about this program and give more details as they become available.

St Louis Real Estate – Mortgage Rates Hold Steady-FHA Makes Changes

Paramount Mortgage Company - St Louis

FHA loans gained in popularity for borrowers as applications for FHA-guaranteed mortgages exceeded an annual rate of 3 million in October; nearly triple the level in 2007.  In 2006, when subprime and other Wall Street programs were at full speed, the annual rate for applications was less than 600,000

As a result the Federal Housing Administration (FHA) Commissioner David Stevens recently announced a set of policy changes to strengthen the FHA’s capital reserves. The changes announced are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.  The goal is to balance risk management and continue to provide affordable, responsible mortgage products. 
 
Announced FHA loan Policy Changes:

  • Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
  • Update the combination of FICO scores and down payments for new borrowers. (tougher standards)
  • Reduce allowable seller concessions from 6% to 3%
  • Increase enforcement on FHA lenders

St. Louis Mortgage Rates – February 2, 2009 *

  • 30-year fixed-rate mortgage 5.00% no points
  • 15-year fixed-rate mortgage 4.375% no points
  • 5/1 adjustable rate mortgage 3.875% no points
  • 3/1 adjustable rate mortgage 3.750% no points
  • Jumbo 5/1 ARM 4.125% no points

For more information or if you have questions on mortgage rates in St. Louis you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.

 


*Note- The above rates are based upon a typical sale price of $187,500 with a 20% percent down payment leaving a loan amount of $150,000 to a borrower with a 720 credit score for a loan with no discount points charged. Rates and terms will vary depending upon loan amount, home value, credit and income of borrower.

This information is provided by this author and this site for informative purposes only and is not warranted or guarteed in any way.

 

FHA Announces Tougher Guidelines for Loans

Dennis Norman

FHA Announces Policy Changes to Address Risk and Strengthen Finances

This week FHA announced policy changes that are going to help them shore up their finances but will make it more difficult and/or costly for your clients to purchase a home.

The FHA policy changes include:
  1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
    1. The upfront mortgage insurance fee to the borrower will be increased to 2.25% from 1.75%.
    2. This will go into effect this spring.
  2. Update the combination of FICO scores and down payments for new borrowers.
    1. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
    2. This change will go into effect in the early summer.
  3. Reduce allowable seller concessions from 6% to 3%
    1. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
    2. This change will go into effect in the early summer.
  4. Increase enforcement on FHA lenders
    1. Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.

Most recent homebuyers are first-time buyers

According to NAR 51 percent of recent homebuyers are first-time buyers and 39 percent of recent home sales have relied on an FHA loan

Dennis Norman

The National Association of REALTORS just released a report showing that 51 percent of the homes sold recently have been to first-time home buyers and that 39 percent of all recent buyers have turned to an FHA loan for financing for their home purchase.

I think this clearly illustrates that the first-time home buyer tax credit, coupled with record low interest rates and drastically reduced home prices, is giving buyers, at least first-time home-buyers, the confidence to move forward in their decision to purchase a home. Oh what I wouldn’t give to be a first-time home-buyer today!

“FHA helps provide affordable mortgage financing to homeowners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”

Setting Up the Next Leg Down in Housing

Loose lending standards in government-backed mortgages is setting up the next wave of defaults and sharp declines in housing prices.

 

 

 

Charles Hugh Smith, Of Two Minds

Charles Hugh Smith, Of Two Minds

Beneath the hype that housing has bottomed is an ugly little scenario: lending standards are still loose and the low-down payment, high-risk loans being guaranteed by government agencies are setting up the next giant wave of defaults and foreclosures.

 

 

You might have thought that the near-demise of risky-mortgage mills Fannie Mae and Freddie Mac would have cooled the supply of highly leveraged government-guaranteed mortgages–but you’d be wrong, for the Feds have compensated for the implosion of the Fannie/Freddie housing-bubble machines by ramping up their other two mortgage mills: FHA and Ginnie Mae. Continue reading “Setting Up the Next Leg Down in Housing