FHA announced a series of changes to their Down Payment, Credit Score, Seller Contribution and Mortgage Insurance guidelines. Credit Score/DownPayment Guideline Change : 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%. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer. Effect of this change…continue reading →
FHA today increased it's upfront mortgage insurance premium requirements for Bay Area FHA Home Loans. Upfront Mortgage Insurance is the money that FHA collects at the time of closing a mortgage to insure the loan against default. Currently, this premium is 1.75% for most purchase and refinance transactions. However, effective April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent for purchase money and refinance transactions, including FHA-to-FHA‚ streamlined refinance transactions. Below is the breakdown of FHA upfront mortgage insurance for different loan programs: Purchase Money Mortgages and Full-Credit…continue reading →
Great news for First Time Home Buyers - FHA is eliminating the 90 day flipping rule for mortgages on San Francisco (SF) Bay Area homes. With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. Currently such homes are mostly bought by investors with large down payments or an all cash transaction. Due to lack of financing options Bay Area First Time Home Buyers were not able to make offers on such homes. This temporary waiver will give FHA borrowers access to…continue reading →
FHA's Energy Efficient Mortgage program (EEM) helps California homebuyers or homeowners save money on utility bills. This is done by enabling them to finance the cost of adding energy efficiency features to their house as part of their FHA insured loan. EEMs recognize that reduced utility expenses can permit a homeowner to pay a higher mortgage to cover the cost of the energy improvements on top of the approved mortgage. FHA EEMs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy efficient improvements…continue reading →
FHA delays HVCC for San Francisco (SF) Bay Area Home Loans until February 15, 2010. FHA announced today that the enactment of Appraiser Independence has been delayed. This was originally planned for a January 1, 2010 implementation. On the lines of HVCC, the FHA policy prohibits mortgage brokers and commission-based lender staff from the ordering the appraisal or communicating directly with the appraiser at any stage during the transaction. Since implementation of the Home Valuation Code of Conduct (HVCC) for conventional loans in May 2009, many challenges and difficulties with appraisals have been…continue reading →
Short sale is increasingly becoming a common option to sell a house in San Francisco (SF) Bay area and rest of California. A short sale is a transaction where a seller sells the property for less that what was owed. If you went through a short sale you could have this question - Do I now qualify for a loan? FHA recently came with a guideline on this question. Below are the highlights: You are not eligible for a new FHA mortgage if you pursued a short sale agreement on your principal residence…continue reading →
Federal Housing Administration (FHA) today announced single-family loan limits for San Jose. These loan limits are effective for loans with credit approval issued on or after January 1, 2010 through December 31, 2010. One-Unit $ 729,750 Two-Unit $ 934,200 Three-Unit $ 1,129,250 Four-Unit $ 1,403,400 These loan limits are also available for the counties of Santa Clara, San Mateo, Alameda, Contra Costa and San Francisco. Home Equity Conversion Mortgages (Also called Reverse Mortgage) The national FHA loan limit for HECM in 2010 remains at $625,500 (150 percent of the national conforming limit). Complete…continue reading →
Effective immediately, FHA has rescinded the second appraisal requirements for properties located in San Jose and rest of the Bay Area (Considered declining markets). For Bay area borrowers where loan amounts can generally exceed $417,000 2nd appraisal requirement was a problem on 2 counts:
- Increased fees towards appraisal (2 appraisals hence double the fees)
- Danger of loan getting declined or loan amount reduced if the value of the second appraisal came lower at the last moment
- For properties located in declining markets, FHA no longer requires second appraisal for loan amounts greater than $417,000 and LTVs greater than 95%.
- Cash-out refinance transactions no longer require second appraisals for loan amounts greater than $417,000 and properties located in declining markets.
- Effective for all FHA loans registered on or after Monday, November 30, 2009, some lenders may still require an appraisal from a lender-approved appraisal management company when any loan amount exceeds $417,000 and the property is located in a declining market. However, a second appraisal will no longer be required.
This update contains the temporary changes to the FHA Condo Approval Process for San Jose and rest of the Bay Area as outlined in Mortgage Letter 2009-46 B. Here are the 6 things you need to know about these changes: 1. These temporary changes are effective on December 7th, 2009 through December 31st 2010; except for Spot Loan Approvals. 2. Spot Loan Approvals will be eliminated as of February 1st, 2010. 3. FHA loan concentration may be increased to 100% if the following criteria are met: a. Project construction has been 100% complete…continue reading →
President Obama signed the congressional resolution extending through 2010 the current conforming loan limits of $417,000 for most areas in the U.S. and $729,750 for high-cost areas, including San Jose. The counties of Santa Clara, Alameda, San Mateo, San Francisco & Contra Costa in the Bay Area will have the maximum loan amount at $729,750.Yesterday actions extends the higher conforming loan limits for Fannie, Freddie, and FHA loans through 2010. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000. "Home sales have shown…continue reading →