Blog of the Mortgage

July 28th, 2008 10:46 AM
What a Week! It’s just one more reason I love an election year: things actually get voted on and approved; even during the weekends.
Last week the House (Wednesday) and then the Senate (Saturday!!) voted to move HR 3221 to the desk of the President.
This bill has far reaching implications for all of us going forward at least until someone votes to change the way we do business again.
It’s always great when you get what amounts to last minute surgeons with out medical degrees trying to patch a bullet hole with a band-aid.
At the end of the day we’re going to have to react to this bill after it gets signed.
The immediate implications for us are:
  • Removal of DPA (Nehemiah, Ameridream et. al.) – Beginning Oct. 1st
  • National Licensing Registry for all loan officers (includes RETAIL!)
  • Moratorium of FHA Risk Based Pricing – Beginning Oct. 1st - This mean for Case file #’s after October 1st we can use the old grid
  • Permanent Calculations for loan limits in high cost areas: 115% of Median home prices for the area or $625,500 whichever is less
  • Permanent increases to the FHA, VA & GSE limits based on the above - All beginning after January 1st
  • Increasing minimum down payment on FHA loans to 3.50%
There’s even a provision, with $300B in funding, permitting the refinance of an underwater loan into an FHA loan. Of course, there’s no free lunch so you have to meet these criteria:
  • Must have a Mortgage note dated between: Jan.1 2005 & June 30th 2007
  • Be On-time or Late on your Mortgage payments
  • Use at least 31% of your gross income to pay your Mortgage payment
  • Prove that their existing payments are financially “squeezing” them thus incurring - Likely future late payments
  • Remove any other mortgage debt against the home (2nd’s, 3rd’s etc) - Seriously, REMOVE/Eliminate/Pay-off
  • Gain a new appraisal for the home
  • Request a refinance of the existing 1st lien to a Maximum of 90% of the new value
  • Put up with Case by case underwriting
  • Pay annual MIP = 1.5% of the new mortgage note
  • Pay 3% “exit” fee in a refinance or sale (effective pre-payment penalty)
  • Share a minimum of 50% of the profits on future sale
  • Starts @ 100% and goes down to 50% in year 5 after the new loan is originated.
There’s a couple of other goodies in this gargantuan Bill and you can read the entire text here. Page 423 for licensing information; Page 477 for FHA information.
 
I have to say, the Surgeons aren’t going to win any awards with this one. There’s still going to be loads of blood letting from that giant bullet hole.
Posted by Raoul Badde on July 28th, 2008 10:46 AMPost a Comment (0)
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