Blog of the Mortgage

October 8th, 2008 9:14 PM
You know I've been posting items from one of Franklin American's advice/consultant partners (Potomac Partners) on HUD/VA business in general. This one carries some Whoppers!

If you ignore this e-mail, well, don't say I didn't warn you!
Please note the highlighted items below.

VA changes
Refis will have the same guaranty as a purchase loan
guaranty on a refi will no longer be limited to $36,000 so the loan amount can exceed $144,000 without additional 25% equity (this is expected as early as 10/1/08)
VA has the authority to increase the LTV on a regular refi up to 100%
stimulus bill mortgage limits are extended for the VA program until 2012
VA limits will not roll back to a mandatory $625,500, which is what would have happened with the end of the Stimulus program at the end of this year.
based on VA's action, we would be surprised if this does not result in the Fannie/Freddie and FHA Stimulus limits being extended until 2012, or at least for the next year

Condominiums
Lenders who have the capacity to approve projects may do so, or they can be submitted to HUD for approval, using a more streamlined process than today.
How is HUD going to manage the lender-approved projects?  Several lenders could be working on the same project.  This is still not clear although HUD seems to understand the problem.
Spot condo approvals will no longer be eligible.
Regarding right of first refusal, lender will have to ensure that the project does not violate any Fair Housing or other legal issues.
expect a ML by the end of Oct, effective on Jan 1, 2009 Section of the Act will no longer be 234(c).  These will fall under 203(b) loans. 
There may be a special ADP code.
Since FHA will be treating site condos as SF residences, will VA do the same?  It's likely they will, they don't like a veteran to be at a disadvantage.
 
Allowable closing costs
expect a new ML to regulate these again for FHA loans they are spiraling out of control and HUD is seeing price-gouging will define those services that should be covered by an Origination Fee; this will likely include application, processing, UW fees, etc.
The list is expected to be very comprehensive again about what may and may not be charged.
 
FHA Performance - Neighborhood Watch
2 yr period ending Aug 07 there were 8xx,xxx loans in the FHA portfolio
2 yr period ending Aug 08 there were 1.37 million loans in the FHA portfolio
most of those 560,000 loans have been on the books for just a few months, they have no seasoning so you would expect to see a decrease in the default rate, but the default rate is virtually the same as a year ago (3.65% a year ago vs 3.55% now)
refis are performing very poorly for FHA; expect to see some tightening on refis, particularly cash-out refis
new construction is not showing a dramatic increase in early defaults from last year

You'll need the following links to download forms & see updates
Go out and have fun!
Posted by Raoul Badde on October 8th, 2008 9:14 PMPost a Comment (0)
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