2 Pieces of Major FHA news:
FHA announces major changes January 20, 2010
This morning FHA will announce a series of changes designed to protect the federal agency that has emerged as the cornerstone of the mortgage market as the housing sector wobbles toward recovery. Lenders will find these new rules painful but necessary. With FHA hovering around 40% of new loan originations, even small changes have a major impact on the housing market.
Here are some of the changes:
-minimum down payment increased to 10% for borrowers with FICO scores below 580 (in reality, this is minor, as few lenders will lend to a borrower with a sub 580 FICO anyway)
-raise the upfront mortgage insurance premium to 2.25% (from 1.75%)
-allow legislative changes to monthly mortgage insurance premium (currently.55% of the loan amount on an annual basis)
-decrease seller concessions from 6% to 3% of the sales price
-grade lenders on loan portfolio performance
What did not change is the required minimum down payment, which currently stands at 3.5%.
Here are a few articles from this morning:
New York Times - http://www.nytimes.com/2010/01/20/business/20home.html?scp=2&sq=fha&st=cse
Wall Street Journal - http://online.wsj.com/article/SB10001424052748703837004575013690004466692.html
FHA Eases Flipping Rules
It appears that starting February 1st, 2010, HUD / FHA is going to loosen their guidelines pertaining to property flips. THIS IS HUGE!!! According to HUD's Shaun Donovan, some of the restrictions will be temporarily lifted beginning February 1st to further promote home sales. Here are some basic guidelines I have been able to research:
- The transaction must be "Arms Length".
- The seller MUST hold title to the property at the time of the sale.
- There shall be no pattern or previous property flipping in the past 12 months.
- The property must be marketed openly and freely (i.e. MLS).
- If the home being "flipped" has a new sales price that is 20% + greater than the previous purchase price, then the seller must document any repairs / rehabilitation performed on the home and/or a 2nd appraisal will be needed and requested. In these cases it should be expected that a home inspection will be required as well. ***Currently, FHA does not require home inspections OR termite / WDO inspections unless the contract calls for them. FHA only recommends the buyer order these services.***
REAL ESTATE NEWS - Sellers Lowering Their Prices Less:
With home prices beginning to flatten in many areas around the country, home sellers are slowly gaining ground in their quest to hold on to their asking price. A new report from Trulia.com finds that of all homes on the market today, 21 percent have seen at least one price reduction. That's the second straight month that percentage has declined.
JANUARY REAL ESTATE SEMINAR - IT IS THIS THURSDAY - 01/21/2010
On Thursday, January 21st, 2010, we are paying for the President of Waterstone Mortgage, Eric Egenhoefer, to fly in town to present a legislative and economic forecast pertaining to the Mortgage and Real Estate Industry. The event will be held at the
MORTGAGE RATES:
Currently, mortgage backed securities (mortgage bonds) are "Channel Surfing". This means that Mortgage Backed Securities are bouncing off of levels of support and levels of resistance that are close in proximity to one another. This is why we are seeing small movements in mortgage rate pricing day in and day out. Currently 30 year fixed rates are bouncing between 5% and 5.25% with 15 year fix rates are in the 4.625% to 4.875% range. These rates are quite a ways off of the lows we saw in November. Most "experts" are calling for November of 2009 as being the "bottom" for mortgage rates. The long term outlook is for rates to rise throughout the year with the average 30 year fixed rate for 2010 being 5.625% to 5.75%, possibly touching a high point in the 6.25% range.
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