FHA Programs: Session 3Thank you for joining the Webinar!

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Company

LOGO

U.S. Department of Housing And

Urban Development

November 2010

FHA TODAY

Today’s Agenda

Previous changes affecting industry partners

HERA changes affecting industry partners

Reverse mortgage program

Manufactured housing

Disaster relief

Hope for Homeowners

Closing Costs

Mortgagee Letter 2006-04;-07

Eliminated non-allowable closing cost fee schedule

Borrowers may pay anything that is reasonable and customary with any real estate transaction

One Exception

Tax Service

Normally $69 to $79

Appraisal Protocol

Mortgagee Letter 2005 – 48

Adoption of FNMA forms

Done “subject to” or “as is”

May be appraised without review of

plans and specs if =/> 90% complete

Eliminated

VC (Valuation and Condition) Sheets

Homebuyer Summary eliminated

Appraisal Protocol - Continued

Inspections no longer

mandated but may still

be required:

Pest Inspection

Well Cert

Septic Cert

Flat and/or

unobservable roof

Items no longer required

to be repaired:

Missing handrails

Cracked window glass

Minor plumbing leaks

Poor workmanship

Defective floor

coverings

Housing and Economic

Recovery Act of 2008 - HERA

Key FHA Provisions

Permanently increases loan limits

Effective January 1, 2009

Maximum county limit will be $625,500

Lowest county limit will be $271,050

Limits vary by county (MSA)

Fannie Mae, Freddie Mac, and FHA may all have

same limits (subject to change)

Home Equity Conversion Mortgage limit $417,000

Housing and Economic

Recovery Act of 2008Key FHA Provisions

Revised downpayment and maximum

mortgage calculation

Effective January 1, 2009

Bans Seller-Assisted Downpayment

Assistance Programs

Effective October 1, 2008

American Recovery and

Reinvestment Act of 2009Temporary Mortgage Limit Increase – Mortgagee

Letter 2009 – 07

Temporary increase in ceiling/limit

175% of GSE ($417,000 x 1.75%)

$729,750

Determined by county MSA’s Possibly higher in Alaska, Hawaii, Guam, and U.S. Virgin

Islands

Home Equity Conversion Mortgage nationwide limit

$625,500

Expires December 31, 2010 (reverts to HERA limits)

Loan must be fully approved by 12/31/10

Housing and Economic

Recovery Act of 2008

Minimum Required Investment - Purchase

Effective January 1, 2009

Minimum cash investment

3.5% of appraised value or sales price (whichever is less)

Secretary of HUD has authority to amend Can set higher, but not lower required borrower

investment

Mortgagee Letter 2008 – 23 September 2008

Maximum loan-to-value (LTV) simplified

96.5% on purchase

Maximum LTV not to exceed 100 percent of appraised value or sales price (whichever is less)

Including Upfront Mortgage Insurance Premium

Example:

96.5% loan-to-value + 1% Up Front Mortgage Insurance Premium = 97.5% (okay)

Revised Downpayment and

Maximum Mortgage Requirements

Home Equity Conversion Mortgage

Programs (a.k.a. HECM)

Known in the industry as a reverse mortgage

Two programs

HECM Standard

HECM Saver (announced September 2010)

Lowers up front cost for borrowers/buyers that want to

borrow smaller amount than would be available under

HECM Standard

Availability of program features same for both

http://www.hud.gov/offices/hsg/sfh/hecm/hecmhomelenders.cfm

HUD’s Web-Site for HECM

Differences Between Programs

HECM Standard

Higher principal limit

factor

Initial Mortgage

Insurance Premium –

2%

Annual Mortgage

Insurance Premium –

1.25%

HECM Saver

Lower principal limit

factor

Initial Mortgage

Insurance Premium -

.01%

Annual Mortgage

Insurance Premium –

1.25%

Home Equity Conversion

Mortgage Programs – Cont.Purchase, refinance, or cash out

Borrower brings in difference between

purchase price and maximum claim

Unlocks and converts equity to cash

Age of borrower, value of property, and

interest rate determine funds available

to the customer

HECM - Continued

Youngest borrower =/> 62

No credit qualifying

No income requirements

No monthly re-payments

Borrower must occupy property majority of year (183 days)

Five (5) payment options

HECM Payment Options = 5

$ Line of Credit = money when needed

$ Similar to bank withdraw

$ Tenure = Fixed monthly payment

$ Term = Fixed payment defined in years or months

$ Modified Tenure = Line of credit & fixed monthly payment

$ Modified Term = Line of credit & fixed monthly payment for months/years

NOTE: Payment option may be changed at any time for a max. $20.00 service fee

Manufactured Housing

Must have HUD I.D. Tag(s)

Must have been manufactured on or after

June 15, 1976

Must be affixed to permanent foundation

– Per FHA guidelines

Can only have been moved from factory

to subject home site once; or factory to

dealership lot to home site once

Cannot be moved from one home site to

another home site

Manufactured Homes - Continued

Must be taxed as real property

Must have engineer’s certification

that permanent foundation meets

FHA guidelines

Can purchase land and home with

one loan

If borrower already owns land, may

be used for minimum required

investment

Disaster Relief – 203(h)

Available to homeowners and renters

100% financing

3.5% minimum investment not required

Must pay closing costs and pre-paids

New home can be anywhere in the U.S.

Must apply within one (1) year

When President declared disaster area

Must document residence and condition

Hope for Homeowners (H4H)

Temporary program approved by Congress

Expires December 2010

Refinance from non-FHA insured mortgage to FHA

Current or in default on existing mortgage

Have not intentionally defaulted on mortgage

Have made minimum of 6 full payments during life

of existing senior mortgage

Must reside in property

H4H Eligibility - Continued

Mortgage must have originated on or before

1/1/2008

Must be borrower’s primary residence

May not have any other ownership interest in

any other property

Non-occupant co-borrowers will need to quit claim

interest prior to occupants applying for mortgage

1 – 4 unit properties eligible

Maximum mortgage amount $550,440

Where to Get More Information

1 – 800 – CALL – FHA (1 – 800 – 225 – 5342) A source for all FHA questions

Industry partners and Consumers

www.hud.gov On-line resource for info about FHA and FHA

programs

On-line source for all other HUD programs, grants,

forms, press releases, etc.

User friendly

www.fhaoutreach.gov/FHAFAQ On-line resource to frequently asked questions

www.hud.gov

www.hud.gov

www.fhaoutreach.gov/FHAFAQ

Agenda For Webinar Dec. 14th

FHA Rehabilitation Loan Programs (203k’s) Regular Rehabilitation Loan

203(k)

Streamline Rehabilitation Loan

Streamlined 203(k)

Energy Efficient Mortgage EEM

Other Repairs

Solar and Weatherization Programs

The U.S. Department of Housing and Urban

Development

would like to thank the

California Association of Mortgage Professionals

And

Oregon Association of Mortgage Professionals

for your interest in

FHA and FHA programs