Archive for September, 2008

FHA Energy Efficient Mortgages

Sunday, September 28th, 2008

The Energy Efficient Mortgages Program (EEM) helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy-efficiency features to new or existing housing as part of their FHA-insured home purchase or refinancing mortgage.

This program seeks to help achieve national energy-efficiency goals (and reduce pollution) and provide better housing for people who might not otherwise be able to afford it. By considering the savings on monthly utility bills when determining how large a mortgage the household can afford, as many as 250,000 more new homebuyers could qualify per year, according to a 1986 study by the Joint Center for Housing Studies. Although EEMs have been available in some States since 1980, they have been little understood or marketed. With EEMs, borrowers do not need to get a separate, costly loan for energy improvements when buying an existing home.

Type of Assistance:
EEM is one of many FHA programs that insure mortgage loans–and thus encourage lenders to make mortgage credit available to borrowers who would not otherwise qualify for conventional loans on affordable terms (such as first time home buyers) and to residents of disadvantaged neighborhoods (where mortgages may be hard to get). Borrowers who obtain FHA’s popular Section 203(b) Mortgage Insurance for One- to Four-Family Homes are eligible for approximately 97 percent financing, and are able to fold closing costs and the up-front mortgage insurance premium into the mortgage. The borrower must also pay an annual premium.

EEM can also be used with the FHA Section 203(k) rehabilitation program and generally follows that program’s financing guidelines.

Eligible Customers:
All persons who meet the income requirements for FHA‘s standard Section 203(b) insurance and can make the monthly mortgage payments are eligible to apply. The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating system (HERS) or an energy consultant. Up to $200 of the cost of an energy inspection report may be included in the mortgage. Cooperative units are not eligible; individual condominium units may be insured if they are in projects that have been approved by FHA or the Department of Veterans Affairs, or meet certain Fannie Mae guidelines.

Eligible Activities:
EEM can be used to make energy-efficient improvements in one- or two-unit existing and new homes. The improvements can be included in a borrower’s mortgage only if their total cost is less than the total dollar value of the energy that will be saved during their useful life. The cost of the improvements that may be eligible for financing as part of the HUD mortgage is either 5 percent of the property’s value (not to exceed $8,000) or $4,000 — whichever is greater.

- by FHA Loan.com

Feel free to contact us today to help you “Go Green!”

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Hurricane Ike Update- Some Breaks on Bills Being Offered

Thursday, September 25th, 2008

Power and gas retailers

*Reliant Energy is waiving late fees indefinitely and will be working with its customers on flexible payment terms and extensions to meet their needs, said communications director Pat Hammond.

Reliant, which has about 1.8 million customers in Texas, also has suspended its credit and collection activity and has stopped disconnecting customers for non-payment.

“We realize that Hurricane Ike has created a lot of difficult financial hardships for people, and we want to do what we can to work with our customers during this difficult time,” said Hammond.

“We ask customers to call us and work out a payment with us,” she said.

*Green Mountain Energy is waiving late fees for customers who call in and let the company know they were affected by Ike, according to a statement from the company.

Green Mountain also is extending its deferred payment plan.

*CenterPoint Energy’s natural gas customers affected by Ike will not receive late notices and late fees will be waived, said spokeswoman Leticia Lowe.

In addition, the utility will also waive security deposits for customers displaced by the storm, she said.
Banks

*Compass Bank has waived access fees to its network of ATMs in Houston and other cities in Texas where it figures Houstonians fleeing the storm may need quick cash, said Thomas Graham, executive vice president of communications in Houston.
The bank also is allowing its small business and consumer customers to defer their loan payments, such as car and recreational vehicle loans. The deferral is up to 60 days depending on the customer’s individual circumstances.

Customers who need early access to their certificates of deposit can have them without paying early withdrawal fees, he said.

And late payments will be forgiven, he said.

Graham stressed – as did other service providers – the importance of giving notice that a payment will be late.

*Capital One is working with its customers affected by Ike on a case-by-case basis, said spokeswoman Pam Girardo in McLean, Va.
The bank has a hardship policy and some examples of what it can do for its customers include waiving late fees, going-over-credit-limit fees and non-sufficient funds fees, she said.

Capital One will also consider reducing a customer’s minimum payments, deferring payments for a limited time, waiving finance charges and waiving accrued interest.

Customers need to call and discuss the options, said Girardo.

Capital One also waived the ATM fees for all its customers who use a non-Capital One machine and has suspended all of its collection activity in the area.

*Comerica has waived ATM fees for customers who use non-Comerica machines and has expedited its process to boost credit card limits, according to spokeswoman Pamela Cathion.

The bank is also offering to donate up to $100 to a charity or community relief organization designated by a new customer who opens a bank account with at least $2,500.

*Discover makes special payment considerations on a case-by-case basis to cardholders affected by a natural disaster, said spokesman Jon Drummond.
Those provisions include, but are not limited to, allowing them to delay payments, and waving minimum payments, late fees and other charges for specific amounts of time depending on a customer’s need.

*American Express spokeswoman Molly Faust said the company will handle each cardholder’s situation on an individual basis. If you need help, please call the toll-free number on the back of your card, or visit americanexpress.com and click on “Hurricane Response: Assistance for our Customers.”

*Chase is asking its customers facing financial difficulty to contact the bank as soon as possible and it will work with them on an individual basis, according to spokesman Greg Hassell.
Telecom companies

*T-Mobile is topping off pre-paid cell phones that were running low at no charge to make sure people don’t run out of service, and it has suspended collections calls in Houston and Galveston.

*Sprint is waiving roaming fees, call-forwarding, late fees and overage charges for customers who use more minutes or text messages than they’re allowed between Sept. 9 and Oct. 11, said spokeswoman Kristin Wallace. The company is also offering free call-forwarding service and Sprint has suspended collections calls and service disconnections.

*AT&T has suspended all disconnections and collection activities. The company is providing free local and long-distance calling in all of its retail stores, and is offering free Wi-Fi service to anyone at all area Barnes and Noble locations, said spokesman Dan Feldstein.

AT&T will work with customers on their billing on a case-by-case basis. AT&T also offers its customers rollover minutes, allowing them to absorb a month in which their usage is heavier than normal.

*Verizon Wireless is giving one month of free service in the 409 area code and has suspended collections calls in the Greater Houston area, said spokeswoman Gretchen LeJeune.

*Verizon, which provides landline phone service in several cities around Galveston Bay, has suspended collections calls and disconnections, said spokesman Lee Gierczynski.

*Comcast has suspended disconnections and collections, said spokesman Ray Purser.

*Time Warner Cable, which provides cable service for Beaumont and parts of Southeast Texas, has credited customers’ accounts back to Sept. 12 and will extend credits until service is restored, said spokesman Gary Underwood. The company also is not disconnecting customers or making collections calls.
Insurance

*Allstate is offering deferred billing options, according to spokeswoman Kristen Beaman. The company will send affected customers a letter, but those who have been relocated can call their agent or 800-547-8676.

*USAA will waive late fees if customers are a few days behind, according to spokesman Justin Schmitt. The company, which also has a bank and offers financial services, also will offer fixed-rate new vehicle auto loans as low as 5.39 percent for people who lost cars in floodwaters. In addition, it will waive insufficient funds fees on checking and savings accounts.

Some breaks on bills being offered
By L.M. SIXEL, BRAD HEM AND DAVID ELLISON  

Copyright 2008 Houston Chronicle

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FHA Underwriting Changes – Rental Income

Tuesday, September 23rd, 2008

The FHA is now taking steps to respond to “unhealthy” practices regarding the housing market, especially with FHA and FHA Approved Lenders.

We have seen first-hand, and taken hundreds of applications on, homeowners that are vacating their current residences to purchase another property. Due to rising fuel costs, most people have been relocating to be closer to their work and other great home buying opportunities in their local areas, and in turn, do not want the responsibility of having to pay 2 mortgage payments per month. This being said, the average consumer is under the impression, that with FHA, their rental income should count in qualifying for the NEW home that they are buying- but that MAY not be the case in the near future.

Essentially what is happening is that the Federal Housing Administration is cracking down on their guidelines in regards to potential home buyers that are planning on qualifying on the new home by using the rental income from their current house. Effective immediately,  RENTAL INCOME from their current residence cannot be used in order to qualify for the new home.

We are closely monitoring the temporary underwriting change to see if this will soon evolve into a permanent rule.

There are 2 exceptions to this, however, and they are :

1.) Relocations – The home buyer is relocating with their current employer, or being transferred to an area not within reasonable and locally recognized commuting distance.

2.) Sufficient Equity in Vacant Property – The home buyer has at least 25% equity in the property, as determined by a residential appraisal no more than 6 months old.

If the applicant ALREADY OWNS rental properties that are disclosed on the application, that is OK; this rule ONLY applies to a principal residence being vacated in favor of another principal residence.

Rest assured that you will be the first to know on the ongoing process of guideline changes, as we at FHALoanHouston.com are your FHA Loan Experts!

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FHA Streamline Refinances

Wednesday, September 17th, 2008

With mortgage rates taking a tumble over the last few days, loan officers with customers who have an FHA insured mortgage have been calling frantically to get them locked in at a lower rate.

What is an FHA streamline?

FHA Streamline refinance is a program designed to give borrowers who already have an FHA insured mortgage the ability to refinance to a lower rate without the expense and hassle of a traditional refi.  Typically that means no appraisal, no credit check (other then a mortgage reference to make sure they have been on time and you can be late up to 2 times in the last 30 days depending on the lender),  no employment information and little or no fees.

You need to remember that FHA is an insurance policy and not a lender.  When you put that into perspective you realize that it is in the best interest of the FHA program to allow for streamlines.  Lower payments equal less likely to default on there obligation which in turn means less of the FHA insurance pool being used up.  Its just like regular insurance, its there but no one wants to use it unless they have to!

So when rates go down- FHA streamline is the way to go to lower your monthly payments.

Interested in a Streamline?  Visit www.FHALoanHouston.com today and apply!

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HR 6694 (Down Payment Assistance)

Wednesday, September 17th, 2008

Here is the resolution that just passed the House Financial Services Committee and is next up for a vote on the house floor.  This could bring back down payment assistance programs.  Here is what the resolution proposes):

H.R. 6694 will reinstate FHA seller down payment assistance for persons with certain credit scores by establishing three classes of eligible borrowers:

- Those with FICO scores above 679 will be allowed FHA seller down payments under current HUD guidelines.

- Those with FICO scores of 620 through 679 will pay a risk-based mortgage insurance premium to cover their possible defaults in the amount of 3.0% of the original principal for a single premium AND 1.25% of the principal balance as an annual premium.

- Those with FICO scores of less than 620 who may be deemed as eligible by HUD for FHA seller down payments will be subject to HUD-established risk-based pricing.

H.R. 6694 will also create an on-time payment incentive based upon a refund of premiums paid in excess of normal premiums if the borrower makes on-time payments for a specific number of years and pays the mortgage obligation in full. If these requirements are met, the borrower will receive a refund in the amount of the difference between the amount normally paid and the amount actually paid.

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HUD Will Require 3.5% Down Payment for FHA Loans

Tuesday, September 16th, 2008

HUD has posted changes to the required down payment structure. These changes are effective for case numbers assigned on or after January 1, 2009.

HIGHLIGHTS:

Effective Date
Case # assignments on or after January 1, 2009

Down payment
3.5% and can no longer consist of Borrower paid closing costs.. i.e. the entire investment is via true down payment (96.5% LTV MAX)

LTV
96.5% max based on the lesser of value or sales price

Refinances
Up to a 100% LTV which includes the UFMIP (i.e… the base loan amount + UFMIP cannot exceed 100% of the value*).

The effective date for this change is for case number assignments on or after January 1, 2009

*lesser of the original purchase price or value if not already FHA insured. Cash out refinances remain limited to 85% LTV or state mandated restrictions. Subject to statutory loan limits as determined by the subject property county.

Please let me know if you have any questions. I’m sure I’ll run into some investor bulletins, and possibly more HUD mandates between now and the effective of these changes and I will alert you to these if/when they are posted.

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FHA Modernization

Tuesday, September 16th, 2008

FHA Modernization

Brian Montgomery, Assistant Secretary for Housing, has testified before the House Financial Services Committee that modernizing the Federal Housing Administration is of paramount importance for America’s “troubled subprime borrowers.” The FHA has been insuring mortgage loans for low and moderate income families since the depths of the Great Depression, but these loans became unpopular with the advent of the subprime market.

However, subprime mortgage loans have proven to be extremely risky for borrowers with bad credit or low income, a problem which has resulted in a recent surge of foreclosures. Home foreclosures not only force borrowers out of their place of residence, but also cost the lender an average of $40,000 and can wreck havoc on real estate investors, lenders, and communities at large.

By approving of the modernization reforms, Montgomery claimed that the “FHA could potentially assist tens of thousands more borrowers who need an exit strategy from their subprime mortgages.” Some of the proposed changes include:

- Removal of the mandatory 3% down payment, which many low income borrowers cannot afford. The FHA plans to switch to a more flexible down payment option.

- Increasing the limits of FHA mortgage loans. Traditionally, FHA had standard loan limits which were often lower than those of subprime mortgage loans. In areas of the country where housing costs are relatively high, many individuals looking to purchase a home could not, as the old FHA loan limits were below the median house prices. With these changes, people in states like New York and California will be able to obtain an FHA loan that will have a loan limit high enough for homes in those areas.

- Creating a new risk-based structure. Currently, all borrowers who apply for an FHA loan are subject to a standard premium. In the new structure, the premium would be based on the credit profile of the borrower and would shift up or down based on that borrower’s level of risk to the lender.

All of these modifications are part of the Expanding American Homeownership Act which passed the House last year by an overwhelming majority. With this new structure, the FHA would not only be able to reach thousands more borrowers, but it would present “a safer, more affordable financing option than many subprime loans,” according to Montgomery. By modernizing its practices and requirements, the Federal Housing Administration will be able to continue increasing homeownership among low-income Americans, minorities, the homeless and the elderly.

Though these sweeping changes to FHA policy will give the most aid to first-time home buyers and families without previous mortgages, the FHA will also continue to offer refinancing options for those who are still working on another loan. As previously noted, many low and moderate income families have found themselves unable to make monthly mortgage payments, mainly due to risky and financially unsound loans. As more and more individuals wish to refinance to a safer, more stable loan, the FHA is there to assist. The number of conventional to FHA refinances has almost doubled in the last year, and as long as borrowers meet a few simple requirements, they will qualify for a more reliable FHA refinance.

- MortgageLoanPlace.com

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New Tax Credit Amounts To a Free Loan for $7,500

Friday, September 12th, 2008

Anyone who has been hesitant about jumping into real estate until conditions settle down should keep in mind these dates: April 9, 2008, through June 30, 2009.

They mark the eligibility time span for the home-purchase tax credit created by the new housing bill. If you have not owned a house during the past three years and can go to closing before the end of next June, you may be eligible for up to a $7,500 credit against your federal taxes for 2008 or 2009 ($3,750 if you file taxes as a single person).

The new credit is expected to benefit hundreds of thousands of buyers. The specifics of the credit changed in the past month as the Senate and House negotiated a final compromise, so here’s a quick overview of the credit in its final form:

• The basic idea: To jump-start housing sales and clear out unsold real estate inventories, Congress is offering tax credits to pull in new buyers. Within the designated time period, buy any house — new, old, any location or condition, any price range — and the IRS will cut up to $7,500 off your tax bill for either this year or next. For example, if you’re an eligible buyer this year and you owe the IRS $4,000 on your total 2008 income tax bill, your $7,500 tax credit could wipe out everything you owe plus get you a $3,500 refund. The new tax credit is what the government calls “refundable”: If your tax bill is less than the credit amount, you get the difference back from the Treasury.

• Eligibility rules: Do you own a home? If so, you’re not eligible for the credit. Did you sell your home more than three years ago and now rent? You are eligible. You’re also eligible if you have never owned a home. Close on a house before June 30, and you can claim a credit of up to 10 percent of the purchase price of the property, up to $7,500. If your adjusted gross income exceeds $150,000 ($75,000 if you’re single), the credit maximum begins to phase down. You cannot claim the credit if you are a nonresident alien, financed the property using a state or local housing agency’s tax-exempt bond mortgage, or do not plan to use the house as your principal residence. Buyers who use the District’s first-time-buyer credit program cannot double-dip and use the new federal credit, too.

• Payback: Unlike some other tax credits, this one requires beneficiaries to repay the credit. Starting in the second tax year after purchase and continuing for up to 15 years, taxpayers are expected to make pro rata repayments to the government on their federal filings. Over a 15-year payback period for the full $7,500 credit, the cost would be $500 a year. If you sell the house before the end of the repayment period and you have no gain on the sale, you won’t be expected to pay the credit back from the proceeds. If you have a net gain, the “recapture” cannot exceed the amount of your gain. In other words, the federal government is taking on all or much of the risk that the value of your new house won’t increase over time.

At its core, the new tax credit functions very much like an interest-free loan for up to $7,500. You pay only the principal back over time.

Rob Dietz, an economist for the National Association of Home Builders, said the new credit not only will pull first-time buyers into the market, but also will have a powerful “multiplier effect” as thousands of sellers of these credit-assisted houses buy replacement homes for themselves, thus extending the impact of the credit into the move-up segment.

How do you claim the credit? If you pass the eligibility tests, simply request the credit on your tax return for either 2008 or 2009. Even if you buy in 2009, you can take the credit against your 2008 taxes by filing an amended return. The association has launched an educational Web site, www.federalhousingtaxcredit.com, with additional information for consumers.

By Kenneth R. Harney

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FHA Loan Limits

Friday, September 12th, 2008

I wanted to make sure I got the link to the loan limits posted in case anyone would like to see if their loan is possibly eligible to go with an FHA loan. I will get into deeper discussions on the criteria for an FHA loan shortly, but in the meantime here is the link I promised :

https://entp.hud.gov/idapp/html/hicostlook.cfm

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Welcome to my FHA Information Site!

Thursday, September 11th, 2008

Hello and thank you for coming to my blog. As you will see I am here to give you information on specifically and ONLY all FHA mortgage products. This site is specifically dedicated to FHA (Federal Housing Administration) mortgages. Since the sub prime downfall, FHA mortgage applications have spiked and will continue to do so.

A common misconception is that FHA mortgages are only for 1st time home buyers and the truth is, that couldn’t be farther from the truth! FHA allows for purchases and for refinances. Here are some key points to know about FHA mortgages (this is just a small sampling and my first post, I will continue to update this site weekly):

· Purchases can be done with as little as 3% down payment

· Refinances can go up to 97% loan to value for rate and term (no cash out) and up to 95% loan to value for cash out! (Plus with conventional rates as low as 6%!!!!!)

· These loans are only done with full documentation (must be able to prove income)

· FHA does allow for a co-borrower or co-signor, we will get into this in detail down the road

· FHA is not FICO score driven! I have seen people with credit scores in the 400’s get their loan done (compensating factors are HUGE, we will also get into this more down the road)

Well this is my first post and there will be plenty more. I will get deeper into each topic and provide detailed information so that you can make an informed decision when considering an FHA mortgage. Hopefully you are being offered an FHA mortgage over a sub prime loan if you qualify, and if your not, feel free to drop me a line and I will help you out. Remember, not all mortgage brokers out there are able to offer FHA mortgages; only certain licensed professionals who are setup with HUD have that ability and these are the people that you should be dealing with because they provide you with the most products and services available to you. Since I am a mortgage “BANKER”, and we are directly endorsed through HUD, I can extended to you many benefits that brokers will not be able to.

One last thing for today, FHA does have loan limits, which basically means depending on where you live you need to see if you fit the FHA criteria. I will be posting the link to the FHA website so you can check the loan limits in your area.

Have a great day!

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