FHA waives 90-day flipping rule for Bay Area mortgages

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 Energy Efficient Mortgages for California Homes

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 Bay Area Home Loans

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 →

Had a Short Sale – Do I now qualify for an FHA Loan in California?

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 →

2010 FHA Loan Limits for San Jose & Bay Area

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 →

FHA waives 2nd appraisal requirement for Bay Area

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
The 2nd problem was a bigger risk if the borrower had removed his/her appraisal or loan contingency. It could potentially result into loss of earnest money deposit. The new rule would make it easier for borrowers to bring in the minimum down payment of 3.5% even if the loan amount is >$417,000 and not worry about 2nd appraisal. Here are the highlights of the new rule:
  • 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.
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Update to FHA Condo Approval Process for San Jose

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 →

San Jose Conforming & FHA Loan Limits extended through 2010

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 →

Delay in FHA Condominium changes for Bay Area

On 10/21 FHA via it's mortgagee letter announced delay in FHA condominium changes. This is what the letter mentioned: Implementation of FHA new policy guidance for condominium project approval and condo unit financing will be delayed until December 7th 2009.  The new guidance, to be issued within the next two weeks, will:  1) offer additional leniencies to address the difficult market conditions and 2) augment some portions of FHA Mortgagee Letter 2009-19, providing additional information and clarification. Until the new guidance takes effect on December 7th, 2009 lenders may continue to use the…continue reading →

FHA is changing guidelines for Condo in Bay Area

If you are planning to buy a Condo in San Jose or other parts of the Bay Area and planning to get an FHA loan keep reading. FHA has made some major changes to their condo guidelines and they go into effect as of Nov 2nd, 2009. Some of the highlights:
  • Currently lots of condominium projects in the bay area is approved by FHA. However, any project approved prior to October 1, 2008 loses it's pre-approval and must re-apply.To find a list of approved projects, visit the HUD linkhttps://entp.hud.gov/idapp/html/condlook.cfm. Make sure under approval method pick the option - "HRAP/DELRAP". Thats the new HUD review and approval process.
  • Spot approvals, where a project could be approved for an FHA loan even if the entire project was not approved by FHA, is not allowed anymore. And though some lenders will have the authority to do so, because of the enormous liability attached most likely they would refrain from doing it. Which means all project approvals will have to go to FHA directly.
That being the case, lets find out what are the FHA requirements for approving a condo project:
  1. No more than 30% of the units can have FHA financing
  2. >50% of the units must be owner-occupied.
  3. No single entity may own more than 10% of the units in a project
  4. No more than 15% of owners can be delinquent on their HOA dues.Also, no pending litigation against the HOA, it's officers or directors is allowed.
  5. The HOA must also provide evidence of the project's appropriate hazard, liability and flood insurance.
  6. For new constructions, at least 50% of the units in the project must have been sold.
  7. But in my opinion the deal breaker could be this condition - A current reserve study must be performed to assure the HOA has adequate funds available for the funding of capital expenditure and maintenance. With so many HOAs running into capital reserve issues recently, this condition alone could be the #1 reason why a lot of projects may not get approved.
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