FHA Announces Risk-Based Premiums
A Special FHA Announcement from FHA Expert Jeff Mifsud
For the first time in history, credit scores will be utilized in FHA lending. Jeff Mifsud, LTB’s FHA expert, encourages all LTB members to review the important FHA guideline changes that become effective on July 14th, 2008.
The following information will be available on LTB’s Legislative Updates page, as well as Jeff’s website www.mseminars.com, where he offers one-of-a-kind FHA training to mortgage professionals.
Let’s take a closer look at the ten primary changes to the FHA guidelines:
1. Borrowers with either no score or at least 500 may get an LTV >90%; see matrix below.
2. Borrowers with a score less than 500 get a maximum LTV of 90%.
3. Borrowers without scores will require manual underwriting.
4. Upfront Mortgage Insurance Premiums will range from 1.25% to 2.25%, depending on score.
5. The Monthly Mortgage Insurance will range from .50% to .55% depending on score.
6. The premium is based on the borrower with the lowest score.
7. If one of the borrowers has no score, then the Non-Traditional credit grade is used.
8. Credit rescoring is allowed to improve a borrower’s credit grade.
9. All FHA Secure refinances >95% LTV with delinquencies have a 2.25% UFMIP and .55% MMI.
10. Along with purchases, these changes apply to cash-out, rate & term, and non-delinquent FHA Secure refinances.
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Property-flipping rule suspended
The White House temporarily suspends a rule that imposes a 90-day waiting period before foreclosed homes can be sold to receive government loans.
The Bush administration is temporarily suspending a 5-year-old rule intended to deter property flippers, as part of an effort to help speed the sale of foreclosed properties.
For one year, the Federal Housing Administration will no longer impose a 90-day waiting period before foreclosed properties can be sold to receive government-backed loans.
The policy was put in place in 2003 to deter property “flipping” schemes, in which buyers are overcharged for foreclosures or other distressed properties. But the surge in vacant properties resulting from borrowers who were unable to afford their mortgages has become a far more pressing concern.
“A glut of foreclosed and abandoned homes harms neighborhoods, frustrates homebuyers and delays a community’s recovery,” FHA commissioner Brian Montgomery said in a prepared statement.
The new policy “will allow homebuyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes,” Montgomery said.
Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48% from the same month last year, and up 7% from April, foreclosure listing company RealtyTrac Inc. said Friday.
Special thanks to Victor Carlino with Mountain West Bank for forwarding this information to me.
Posted under For Buyers
This post was written by Christina Ethridge North Idaho Real Estate on June 18, 2008
Tags: fha, lending, real estate
