Tag Archives: FHA

A Government Shutdown and Your FHA, VA, or USDA Mortgage Loan

updated: seems there’s been a reversal on FHA mortgages, as first mentioned by Marianne Washington of Wells Fargo Home Mortgage.

Certainly you’ve heard about this whole idea of a government shutdown. Regardless of your feelings on the issue, PLENTY of home borrowers and home sellers need to know what to expect moving forward.

Several types of mortgage loans are backed by the United States Government, including FHA, VA, and USDA loans. If you are a borrower currently under contract on a property and have applied for financing under one of these mortgage programs, you are most certainly going to be affected should when the government shuts down on October 1st. Contact your agent to see what options you might have going forward, but chances are they’re not going to know much, either. My suggestion to our clients would be to contact a lender to see what other options might be available, including low-money down conventional programs (since they’re issued by Fannie and Freddie). If you want to know who to talk with, email me and I’ll be glad to make a recommendation.

Sidenote – I’ve heard conflicting reports on whether VA loans will be affected by a government shutdown. Since VA loans are funded at least in part by user fees there’s the possibility that they will continue, but I’m a cynic … I’m going to suggest that they’ll be placed on hold, as well.

If you’re a home seller currently under contract and your buyer is using one of these three programs, I hope you’re patient. All three of these loan programs are most certainly going to be put on hold indefinitely, so hold tight.

This too, shall pass, and perhaps it’ll be good for Washington to see we’re doing just fine despite them. Want to know more? Here you go.

 

government shutdown affects mortgages

Photo credit.

Want an FHA Mortgage? Get That Case Number Assigned by March 1st

HUD just announced that mortgage insurance on FHA loans will go up April 1 2012.  And there’s a good recap on Dan Green’s Mortgage Reports blog.

Want an FHA mortgage?  Start by talking to Dan or Brandon.

A Federal Housing Administration (FHA) loan is a loan that’s insured against default, meaning the FHA guarantees the loan will not be a loss for the lender should the borrower not pay … which is why there’s a fee for mortgage insurance.  The FHA charges this upfront fee – currently set at 1% of the loan amount – in addition to a monthly insurance premium, called MIP.  Lenders like these FHA loans because of the guarantee, and borrowers – home buyers – like them because of the low downpayment requirement of as little as 3.5%.

It all changes April 1 2012, though.  From the post:

Upfront MIP for loans raises from 1.000% to 1.750% of the loan size. Annual MIP fees change, too, climbing by 10 basis across the board, and by an additional 25 basis points for loans between $625,500 and $729,750.

Using the example of a recent transaction, the borrower purchased a $217000 house, and paid a fee of $2100 at closing for the upfront MIP.  Starting April 1 2012, that same borrower would pay a fee of $3797 for the upfront MIP on the same house.  A difference of $1697 just because they closed before April 1.  That’s comparable to saving enough to pay a year’s worth of electric bills.

Need an FHA case number?  Talk to Dan or Brandon.

If you anticipate buying a home in the New River Valley this summer, get your FHA case number assigned before April 1.  It’ll save you quite a bit of money.

Looking for a home in the New River Valley?  Start here.

 


Are Blacksburg Condos Certified by the FHA?

In an ongoing circus of head-scratching, it’s being reported across the state that many condo complexes are losing their Federal Housing Administration certification.  This, on top of the already difficult lending environment applied to condos.

Which is important in Blacksburg because we have a lot of condominium complexes, and when a complex is certified it means the FHA will loans to buyers in that complex.  However, if a complex isn’t certified then it makes it difficult near impossible to get a mortgage loan in the conventional mortgage market.

Essentially what happened was that condominiums have had some of the highest foreclosure rates nationwide, and when the FHA realized this, they decertified all condo complexes, requiring each to be recertified.  You can search Blacksburg condominiums using the HUD Tool, which shows that 15 complexes in the 24060 zip code have been recertified, but thirteen of those fifteen have had their certification expired, and only one has had their certification extended.  Yes, I’ve added emphasis to the previous statement.

Why does any of this matter?  Without FHA certification, you cannot purchase a Blacksburg condo using a conventional (i.e ANY) mortgage loan that will be sold on the secondary market.  It might be possible for a bank to take an in-house loan, called a shelf loan, but consider it highly unlikely.  As a buyer of a condo, do you want to take the time to find the right condo, apply for a loan and get six weeks through the process, only to find out days before closing that you can’t actually purchase the unit?  As a seller, do you want to accept an offer, take the condo off the market for several weeks and then find out the same thing?  Neither is a good situation, and your agent and lender need to know how to determine whether the complex you’re trying to get into is currently certified with the FHA.  And, compounding things further, the owner-occupancy rate must meet the lender’s guidelines, which means it’s even more important to consider using a local lender when purchasing a Blacksburg condo – they know the complexes and the market nuances, and armed with that knowledge can go to bat for you on your behalf when it comes to these ratios.

Long and short?  There are a lot of Blacksburg condominium complexes not currently certified with the FHA, and they’ll need to do so if they’re going to sell any more units in their complex.  As a buyer or seller, ask your agent whether your complex is in compliance.  You can see more, including requirements for FHA Approval of a Complex, here.

Why Is It Harder To Sell A Blacksburg Condominium?

Condos going up or down?

Recently, I was talking with someone regarding the oversupply of condominiums in the Blacksburg market, and I was asked what I thought it’d take for condos to begin selling again.  I tried to be as honest as possible in my answer, saying that two things needed to happen in order for the condo market in Blacksburg to begin picking up again:

  1. the economy needs to improve, and people will need to feel comfortable spending discretionary income on what is often second homes and/or investment properties.  In an uncertain economic climate, many folks with cash to spend are reluctant to do so, because of the unknown around the corner.
  2. financing guidelines for condos will need to relax.  Right now, conventional, fixed financing for condominiums is extremely difficult to get, in large part because most financing guidelines are currently requiring that more than 50% of the complexes be owner-occupied.  In a college town, with 26000 students and more than 60% of them living off-campus, you can imagine how difficult that ratio is to reach.

When I looked at the Year To Date sales numbers for Blacksburg condos, and compared that to years past, the results weren’t surprising … prices are steady with where they were in 2006, it’s taking longer to sell, and fewer are selling.

Year # of Sales YTD Median Sales Price YTD Median DOM YTD
2009 30 $125250 136 Days
2008 49 $129000 84 Days
2007 78 $121750 85 Days
2006 122 $125000 96 Days

Compounding the issue further will be the new FHA guidelines coming out November 1 2009.  Once those new guidelines arrive, condo projects will need to be FHA-approved, which as of right now means they’ll need to apply for approval – and that could take several months!  During that time, if an owner wants to sell a condo in a project that has NOT been FHA-approved, or a buyer wants to buy in that same project, than they’ll need to wait for that approval to come through before buying or selling.  Additionally, only 30% of the loans in any given complex can be FHA.

After November 1 2009, will it be tougher to buy or sell a Blacksburg condo?  Yes, it looks like it.  Can it be done?  I think so.  But we’ll have to be patient.

Thanks for the pic.

More on Taylor, Bean & Whitaker

A couple of days ago, the news in the mortgage industry was the beat down Taylor, Bean & Whitaker was getting.  Since that post, I’ve contacted a few past clients and friends who have used TBW to secure their mortgages, and everyone wants to know …

“What happens to my mortgage now?”

First things first, you’ll still have to pay it.

But more importantly, WHERE do you pay it?

For the time being, keep making your payments direct to the same address you’d been making them to, and keep copies of those payments.  Eventually, you’ll be contacted and told where to send payments going forward, but for now don’t just stop paying because it’ll ding your credit.

And remember, if you are anywhere in the loan process with Taylor, Bean & Whitaker other than Closed and Funded (i.e. you have the keys to your home and have made at least one mortgage payment), you are going to have to find a new FHA loan.  I’m sorry about that.

Any questions?

Buyers – The First Time Buyer Credit Can Now Be A Downpayment

I’ve written a few times here on the blog now about the First Time Buyer Tax Credit, and one of the things that kept getting thrown about was whether the credit could be used as a downpayment. For the longest time, the answer was no, but recently that’s all changed – kind of.

At the National Association of Home Builders Spring Board of Directors meeting (could they come up with a longer phrase?), HUD Secretary Shaun Donovan (he looks kind of mean, doesn’t he?) made the announcement that for buyers able to utilize the First Time Buyer Tax Credit, the $8000 credit can be used for a downpayment on FHA loans to help cover things like closing costs, or putting down more than the FHA-required 3.5%.  The reason I said “kind of” above is that HUD is saying the credit can’t be used to cover the 3.5% that a buyer would have to put down, so on a $150000 house a buyer is still going to have to come up with $5250 to bring to closing – many were hoping that the tax credit could be used to cover that 3.5% requirement.  No dice.  Here’s the full text of the announcement.

“We believe this is a real win for everyone,” said Donovan. “Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation’s housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we’re doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.”

I’ve heard of one national bank who’s working on a program that would allow buyers to use the $8000 for their downpayment, but so far I’ve not gotten confirmation that it’s been completed.  Essentially, a lender would give you an additional $8000 “loan” at closing to take care of things like your downpayment, closing costs, etc., but I guess the question is when would the bank be reimbursed from the federal government.   However it shakes down, that’s the right step to take, in my opinion.  In the meantime, if you’re a first time buyer without the 3.5% downpayment requirement there are still several sources to consider when trying to gather the money, including employer plans, family members, and state and local governments (Blacksburg has a $3000 grant, for instance, available to those who qualify).

The Trouble With FHA Loans

A friend sent me the following email, and I had to post it.  According to Snopes.com it’s a recycled bit of fun, but nevertheless I thought it appropriate given the subject … and because I can see it happening.  Ah, bureaucracy … and lawyers.

Part of rebuilding New Orleans caused residents often to be challenged with the task of tracing home titles back potentially hundreds of years.

With a community rich with history stretching back over two centuries, houses have been passed along through generations of family, sometimes making it quite difficult to establish ownership and to even get loans for any situation. That´s why it´s a good thing that people can get their loans from Completeautoloans.com without neeeding lots of information. And when you happen to end up in a car accident then Becker car accident lawyers can help you out and they have a record of success.

Here’s a great letter an attorney wrote to the FHA  on behalf of a client:

You have to love this lawyer …….

A New Orleans lawyer sought an FHA loan for a client. He was sure the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral. The title to the property dated back to 1803, which took the lawyer three months to track down.  After sending the information to the FHA, he received the following reply.

(Actual reply):

“Upon review of your letter adjoining your client’s loan application, we note that the request is supported by an Abstract of Title. While we compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. If you currently need a loan and need help meka sure to check out HockYourRide.com.au to get assistance. Before final approval can be accorded, it will be necessary to clear the title back to its origin.”

Annoyed, the lawyer responded as follows:

(Actual response):

“Your letter regarding title in Case No..189156 has been received. I note that you wi sh to have title extended further than the 194 years covered by the present application. I was unaware that any educated person in this country, particularly those working in the property area, would not know that Louisiana was purchased by the United States from France, in 1803 the year of origin identified in our application.

For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France, which had acquired it by Right of Conquest from Spain. The land came into the possession of Spain by Right of Discovery made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the Spanish monarch, Queen Isabella. The good Queen Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus’s expedition. Now the Pope, as I’m sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume that God also made that part of the world called Louisiana .. God, therefore, would be the owner of origin and His origins date back, to before the beginning of time, the world as we know it and the FHA. I hope you find God’s original claim to be satisfactory.

Now, may we have our damn loan?”

The loan was approved.

First-Time Buyer Credit Hits A Three-Letter Roadblock

I thought it was probably too good to be true.

Wednesday, I wrote that there was talk going around the Interweb that FHA was going to allow the $8000 credit that applies to first-time home buyers to be used as a downpayment at closing, but that lenders were telling me they weren’t quite sure of that yet.  Thursday, the Office of Management and Budget confirmed they were putting the brakes on that for now.

FHA loans are popular with buyers because they only require a downpayment of 3.5%, but right now FHA rules state that the money for a downpayment can only come from:

  • money in the bank
  • a gift from a family member, or employer-contributed money
  • government agencies, or non-profit sectors of federal, state or local government
  • non-profits approved by FHA
  • borrowing from another home, or other secured funds like your 401-k

More to come, this whole thing is going to continue to be fluid.  Should be interesting …

I also found a good locksmith eugene that helped my fix my car lock fast.