HUD has issued Mortgagee Letter 2010-28 changing the Upfront and Annual Mortgage Insurance Premiums effective with case numbers assigned on or after October 4, 2010 as follows:

Upfront Premiums

Annual Premiums

These premiums are effective with case numbers assigned on or after October 4, 2010.

With the number of short sales, properties being sold for much less than payoff, the question becomes more and more popular and, unfortunately, more and more necessary.

“How long after a short sale can we qualify again?” It is a question often asked and until now the answer, with the exception of lender enhancements to Fannie Mae and Freddie Mac guidelines, has been much unchanged.

With the release of FNMA’s DU 8.1 comes some huge game changers.

“DU will be updated to incorporate the policy changes specified in Announcement SEL-2010-05, Underwriting Borrowers with a Prior Preforeclosure Sale or Deed-in-Lieu of Foreclosure, regarding prior deed-in-lieu of foreclosure actions. If a deed-in-lieu of foreclosure is reported within two years of the credit report date, the loan casefile will receive a Refer with Caution/IV recommendation.”

Translated into common language that means regardless of the amount of down-payment, debt-to-income ratio or credit scores the loan application will not receive the all cherished “Approve/Eligible” from the Fannie Mae automated Desktop Underwriter. Instead these files will all be subjected to manual underwriting and will result in longer underwriting times and closer examination.

For buyers looking to purchase who have normally qualified for FHA home loans after as little as two years the news is much less pleasing. For loans with down payments less than 10% DU will issue the dreaded Ineligible where any applicant has had a short-sale or deed-in-lieu of foreclosure within the last seven, yes 7, years. This effectively removes millions of buyers from the market for another 7 years. Your government hard at work.

Keep in mind these changes are to Fannie Mae’s underwriting engine and guidelines not to FHA or other sources. However with FNMA being the largest purchaser of mortgage securities today it greatly impacts the home sales market.

For home buyers with 10% down but less than 20% down the waiting period will be four years:

DU Version 8.1 will also include the following requirements that will apply to borrowers with prior deed-in-lieu of foreclosure actions that occurred two or more years, but within 7 years from the credit report date.

Loan casefiles submitted to DU with an LTV or CLTV greater than 80 percent where a borrower on the loan casefile has a deed-in-lieu of foreclosure action that was completed two or more years, but within four years from the credit report date will receive an Ineligible recommendation, and therefore ineligible to be submitted for loan approval and purchase.

Loan casefiles submitted to DU with an LTV or CLTV greater than 90 percent where a borrower on the loan casefile has a deed-in-lieu of foreclosure action that was completed four or more years, but within seven years from the credit report date will receive an Ineligible recommendation, and therefore ineligible to be submitted for loan approval and purchase.

This version of DU is implemented on June 19, 2010 and will affect all loans which need DU approval on or after that date. Generally the remainder of the market follows the lead of Fannie Mae in the event their loans may eventually be sold to Fannie.

Related articles by Zemanta

• Fannie Mae gives incentive to short sale homes over foreclose (agentgenius.com)
• Short sale in the last 7 years could mean “you’re out!” (zillow.com)

Sounds easy to ask, doesn’t it? “When can we close?”

Sure, everyone would like to hear, “Oh, just whenever you’re ready!”

The truth? Whether you are a real estate investor looking for a mortgage for acquisition, rehab or construction or you are a homeowner just looking to purchase a home there are a couple of points you need to be aware of when it comes to closing speed and dates for any mortgage loan.

Closings are not demandable even by your real estate agent – a common fallicy among inexperienced agents. Many moving parts are involved in closing on a purchase or a refinance. Pay special attention to the list of items at the end of this article which can cause delays. Take special note to how many of those are under your control or within the control of the lender/broker. The person who will actually be making the final scheduling of your closing will be the lender who will pass that information to the processor who will pass it to the attorney. Real estate agents do not control or have the ability to affect closing dates and times (although some want to force the issue around their schedule it’s actually up to the lender first and you second – I don’t care when you close so long as you close!)

Here is an average sampling of how this works. You’ve already called us and been prequalified – since you know that’s the correct order of things – and now you’re shopping and you’ve found a house.

1. We know the most often required documents so we gather those from you ahead of time.
2. You make an offer on a house.
3. A couple of days later that offer is accepted.
4. Generally, the offer is going to show a closing date 30 days from the day the offer was made. Not from the day it was accepted.
5. You tell us the offer was accepted so we start “start the ball rolling”.
6. An appraisal must be done and this requires an executed sales contract. Sometimes we get that in our office right away, sometimes – for one reason or another – it is delayed. Appraisals take 2 days to a week as a general rule.
7. While we’re waiting on the appraisal we’ll “update your docs” which means we’ll ask for current pay stubs, bank statements, and any other documentation to prove income and assets. If you get those back to us right away there’s no delay. If you drag your feet – there is a delay!
8. We’ll need insurance documentation – this is entirely dependent on the co-operation of your insurance company. As I am writing this our processing department is “having fits” with an insurance company who has held up a closing for over 5 days while we wait on proper documentation. That’s rare, most insurance companies are prompt and professional.
9. Once we have all the required documentation we send the “package” to the underwriter. Underwriting can take as little as one hour and as much as several days. The deciding factor is underwriter workload.
10. The underwriter may ask for additional documentation. If they do you can (a) argue with the processor about having to provide it and end up sending it anyway or (b) get it back in as quickly as possible.
11. Once the underwriter has issued a “Clear To Close” with no further conditions you’re good to go.

Average closing time from application to close? About 14 days industry wide. It can happen in as little as 48 hours but that is rare [edit: since this article was originally published in 2006 new federal regulations have been passed requiring a minimum of 3 business days for the borrower to contemplate the mortgage offer before the lender can proceed which adds a little time to closing].

Lenders and brokers who advertise 24 hour closings are omitting the first 10 steps from above. NOBODY can close a purchase loan in 24 hours from the time your offer was accepted.

Delays in closing can be caused by many things. More often than not delays are caused by one or more of the following:

1. Fully executed contract delayed. This happens more often on foreclosures where the seller is a bank and it takes them a few days to sign the contract and return it.
2. Appraisal coming back with a value lower than the sales price. Very rare but it has happened.
3. Appraisal coming back with “subject to repair” comments which exceed those allowable by the lender.
4. Lack of co-operation from the insurance company. Loss-Payee Clauses are requested in writing and are generally returned within 24 hours. Anything longer is considered a delay.
5. Lack of co-operation from current mortgage company in returning pay-offs or Verification of Mortgage (VOM).
6. Lack of co-operation from employer in returning Verification of Employment (VOE).
7. Income and/or assets on application used for pre-qualification being overstated and not supportable by documentation.
8. Borrower’s earnest money check not being deposited into the Real Estate Broker’s escrow account.
9. Problems with the title to the property – discovery of liens or multiple title changes in short succession.

These are just a few “hiccups” that are fairly commonplace on my side of the desk. The most important thing to remember is that the staff at your mortgage broker or lender is working for you. They don’t get paid unless and until your loan closes. So guess what? That’s right! They really want your loan to close.

It takes dozens, often hundreds, of man-hours to take a loan from application to closing. There are many people involved in the process that you never know exist. Some of them work on commission and only get paid if your loan closes. Others are on salary and of that group some just don’t care.

Most broker’s are very committed to you. I can speak for my own staff and say they definitely take it personally … the good and the bad.

Ken Cook – Georgia – FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452 – Originally published in Active Rain on July 24, 2006.

Making it more obvious every time regulatory changes are made at high level that those who make the changes are more in favor of big banking than the individual HUD and the GSEs have struck again. Beginning in January you will have a new Good Faith form and HUD settlement statement. The objective is to make it easier for the customer to comprehend and shop for mortgages. The result is it is easier to find the numbers but no easier to shop for mortgages.

Predictions of how these new forms will affect the borrower are difficult with a couple of exceptions. The requirement of the loan officer/originator to include an origination fee which has a zero tolerance of change between the GFE and the HUD will be?disastrous?in the cases where it affects the borrower. The regulation says once the origination fee is on the GFE it cannot change, at all, that means go up OR go down, on the HUD at settlement.

Furthermore another nail in the coffin of mortgage brokers, unrightly blamed in the mortgage implosion, by requiring the broker to SUBTRACT their commission from the closing costs. This is the most ridiculous portion of the new regulation. Why? Bankers are not required to show their commission at all. Brokers, who have never earned even as much as bankers, are required not only to show their commission but to give it back.

I am not a broker but I do know how the system works.

So does this make it better to shop at a broker? You would think so. However it is much more difficult to get a lender to actually close a broker’s loans right now. This is just another sample of how the rule makers are bought by bankers and create legislation which further impedes the home owner’s ability to?achieve?transparent and beneficial financing on their homes.

Just when you thought the changes were slowing here come some of the most sweeping changes in the mortgage industry in decades. Brokers are all but gone – down to numbers less than 20% of less than two years ago. In Georgia alone the number of licensed mortgage brokers has dropped from 8700 to only 1800 in less than 24 months. Brokers may very well soon be all but dinosaurs.

Get ready for the opportunity to participate, and present, to hundreds of real estate and mortgage people across the nation about how to beat the changes and still provide services for your clients. Bankers, lenders, real estate agents, appraisers, and others will be invited to join.

Stay tuned! Ken Cook 678-439-8683

What is the purpose of this program?

To provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD.

What are the eligibility requirements?

• The borrower must meet standard FHA credit qualifications.
• The borrower is eligible for 96.5% financing. The borrower is able to finance the upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium.
• Eligible properties are one-to-four unit structures.
• To learn more about the mortgage limits in your area, go?here

For More Information

Call Ken Cook at 678-439-8683 I am a Senior Mortgage Lender with AmericaHomeKey in Marietta, Georgia residential mortgage licensee 23191.

Earlier in 2009 HUD put a nail in the coffin of one of the only stimulas packages that had ever been successful without spending your tax dollars and that was Down Payment Assistance offered by companies like Nehemiah. The way it was worded was to say that homes purchased using independent, not-for-profit down payment assistance on FHA home loans, in Georgia and around the nation, somehow magically had a higher foreclosure rate than homes purchased using taxpayer funded down payment assistance. It was not true but I digress.

Right now HUD homes can be purchased for only $100 down using FHA home loans in Georgia and other states. If you qualify for an FHA home loan and the home for sale you are interested in is a HUD home, foreclosed on by HUD as a result of a defaulted FHA home loan, you may use an FHA home loan and purchase that HUD owned home for only $100 down. There are other caveats as well such as a maximum of $5000 in repairs which much be completed within 10 days of purchase.

Call your area FHA mortgage lender, banker or broker now before this program is gone. You can always call me directly and I can point you to someone in the business in your area unless you are in Georgia where I can help you with your FHA home loan. My cell number is 678-439-8683 and you can phone me anytime.

The Georgia Dream down payment assistance plan has been extended to higher loan amounts and higher income amounts in the Fall and Winter of 2009. Call me on my cell phone for specific examples of the augmentation to this program – that’s 678-439-8683.

Here is some information directly from Georgia DCA about the Georgia Dream Down Payment Assistance Plan.

Higher Income Limits!
Higher Purchase Price Limits!
No First Time Home-buyer Requirement!

In the 21 counties designated as Federal Disaster Areas.

The 21 Georgia counties are:

Carroll, Catoosa, Chattooga, Cherokee,
Cobb,Crawford, Dawson, DeKalb, Dooly, Douglas, Fulton, Gwinnett, Heard, Houston, Newton, Paulding, Peach, Rockdale, Stephens, Taylor and Walker.

For a limited time ANY HOME BUYER in these counties may qualify for Georgia Dream products with the following special guidelines:

You DO NOT have to be a First Time Home Buyer (For a Georiga Dream? First Mortgage Loan combined with NSP or “PLUS” down payment assistance)

Higher purchase price limits
Catoosa, Chattooga, Crawford, Dooly, Houston, Peach, Stephens, Taylor and Walker – $250,000

Carroll, Cherokee, Cobb, Dawson, Dekalb, Douglas, Fulton, Gwinnett, Heard, Newton, Paulding and Rockdale – $300,000

Higher Household Income limits
Catoosa, Chattooga, Crawford, Dooly, Houston, Peach, Stephens, Taylor and Walker
1 or 2 persons $73,000
3 or more persons $85,000

Carroll, Cherokee, Cobb, Dawson, Dekalb, Douglas, Fulton, Gwinnett, Heard, Newton, Paulding and Rockdale

1 or 2 persons $86,000
3 or more persons $100,000

Probably so, the House of Representatives voted on the 8th to give service members who served a minimum of 90 days overseas an extension on their ability to claim the $8000 federal tax credit for first time home buyers. TBWS reported the extension of 6 months based on Housing Wire reports while US News reported a 12 month extension.

Here’s the official story from Congressman Mark Schauer:

WASHINGTON, Oct 8 - Today, Congressman Mark Schauer voted to pass two key measures for our American veterans. The Service Members Home Ownership Tax Act (H.R. 3590), which passed with bipartisan support today, will extend the deadline for taking advantage of the first-time homebuyer tax credit under the American Recovery and Reinvestment Act for qualified service members by one year. Today’s House passage of an amendment to the Veterans Health Care Budget Reform and Transparency Act (H.R. 1016) will help advance the legislation towards a Presidential signature. The bill authorizes Congress to approve investments in Department of Veterans Affairs (VA) medical care one year in advance to provide more predictable health care funding for veterans.

If you have questions or comments about the First Time Home Buyer’s Tax Credit, FHA, VA or any other real estate finance questions I will be happy to answer. Telephone me at 678-439-8683

The MDIA Rule went into effect, in part, on July 31, 2009. Many people still are not aware of this rule and how it may affect every closing in the nation. This rule, unlike some others, applies to banks, lenders and brokers equally.? In short it says the Truth-In-Lending document with an accurate Annual Percentage Rate must be delivered to the borrower a minimum of seven (7) business days before closing.

This rule affects all loans whether it is an FHA loan, a Fannie Mae loan, a Freddie Mac loan, or a Ginnie Mae loan. The MDIA affects loans originated by brokers, lenders and bank employees. The MDIA applies to new homes, previously existing home and home refinance loans.

Here is the catch: If the APR changes more than .125% the Truth-In-Lending (the other 1/2 of the Good Faith Estimate) has to be resent and another waiting period of three (3) business days must expire. Some lender interpret that to include a decrease in the APR of more than .125% and some only consider an increase of more than .125% since the government’s action does not specify.

There are many, many reasons the initial disclosure could be wrong including loan amount which may be affected by the appraisal, payoff which could be higher (and usually is on a refi) than indicated on the current mortgage coupon, or a list of other factors which may even affect a home purchase – not just a refinance.