HVCC Petition - Written by TBWS.com

HVCC Petition - from 2008 - Written by broker

HVCC Petition Sponsored by CAMB

HUD update and Potomac Partners Update on HUD:
I had the opportunity to sit in on an all-day HUD training in San Francisco the Friday before last. I had to note this is likely one of the only times government employees got to stay at one of the nicest Hotels in San Francisco (the training was at the St. Francis Hotel on Union Square). In any case, I saw quite a few of you there in the morning and it was encouraging to know that you are taking the time out of your day to keep improving your skills in this ever changing market. To get updates on more Training Opportunities from HUD head over to this link and sign up for their automatic e-mails. This will keep you ahead of the game with Mortgagee Letters (ML) changes etc.
 
Unfortunately for me after 8 hours there were really only a couple of take-a-ways:

• Insurability is not the same as sale-ability (ie. HUD will insure loans lenders won't write).

• Expect a Mortgagee Letter on Short Sales (currently Short sales are treated as foreclosures And I expect that HUD will be following FNMA in shortening the time period to wait for a new purchase for Short Sellers)
  

• Expect a Mortgagee Letter on fee limitations (Currently originators may charge discount points to the borrower and collect them as quasi broker fees - not buying down the rate)
  

I anticipate that HUD will be going back to the "old" model of fee schedules with allowable and non-allowable fees. 

• Reminder to Revisit ML-2009-19 Spot approvals no longer required as of 10-1-09 (separate e-mail detailing this letter to follow). This is great news for 2 unit condo owners all over America.

• HUD has NO intentions of following HVCC requirements at this time nor do they anticipate adopting the requirements at any time in the future (phew!)

 
Since this a HUD update mail I am sharing our most recent Potomac Partners update that we received on Friday as well.

Below are some comments on specific issues.

• FHA Mortgage Limits 

The House Appropriations Committee has included provisions in the HUD annual appropriations bill to extend the current FHA limits for FY 2010.  The limits could increase if market conditions improved in an area.  See page 145 of the link below.
Link to the Bill

• FHA Commitment Authority

In National Mortgage News Online last Friday, it was reported that FHA had advised Congress that it had used up 75% ($236 billion) of its $315 billion of commitment authority by June 16th.   Since FHA activity continues to increase as the GSEs and MIs restrict new purchase originations, it is possible that FHA will run out of commitment authority in the next month or so unless additional commitment authority is obtained.  HUD has requested an additional $85 billion in authority to address the current shortfall in FY 2009. 
We believe that FHA will eventually obtain the necessary authority (because of FHA's importance to the economy) even though some in Congress are raising concerns.  In the unlikely event that HUD is delayed in receiving additional commitment authority, we have prepared the following background information for you.  

• Problem: Lender Liability For Loans Not Insured within 60 Days of Loan Closing

The fundamental lender concern with the lack of commitment authority is your liability for delinquent loans not endorsed within 60 days of loan closing.  After 60 days,  as you know, the lender cannot obtain insurance endorsement unless it certifies the loan is current.     
FHA Has Shown Flexibility in Past
In 1997, FHA  temporarily suspended its ARM program because, by law, FHA ARM volume is capped at 30% of total insured activity for the previous fiscal year.  In Mortgagee Letter 97-35 addressing this issue, FHA was very flexible and treated uninsured loans as current as long as the case files were submitted for endorsement within 60 days of closing.  While lender insurance was not implemented in 1997, FHA prepared an analogous process that guaranteed insurance as long as lenders entered insurance data into FHA Connection. 
Bottom Line
We would be very surprised if the Congress did not increase FHA's commitment authority.  In the unlikely event that FHA must suspend insurance operations, we believe they will follow the approach outlined in 1997.  In a worst case scenario (which we do not see happening), lender insurance does provide you with a mechanism to minimize possible disruption to your operations.  As long as the lapse in commitment authority does not occur until August, you should have time to insure loans in October (in the new fiscal year) and still meet the 60 day submission requirement for insurance endorsement.

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