It’s been a busy week for HUD as far as mortgagee letters go. HUD released the updated LTV/credit score requirements, which they announced earlier this year. Loan to value (LTV) ratios will now be limited depending on the borrower's credit score as follows:
• Borrowers with a minimum score of 580 or above are eligible for maximum financing;
• Borrowers with a minimum score of 500 to 579 will be limited to a 90 percent LTV; and
• Borrowers with a minimum score under 500 are not eligible for FHA financing.
Borrowers without credit scores may still qualify for financing under the non-traditional credit underwriting requirements. These requirements are effective for all case numbers ordered on or after October 4, 2010.
HUD has delayed any changes in the maximum amount of seller concessions or any changes in manual underwriting requirements.
Showing posts with label HUD. Show all posts
Showing posts with label HUD. Show all posts
Friday, September 3, 2010
Wednesday, September 1, 2010
What is going on with FHA mortgage insurance?
We continue to receive multiple questions regarding the implementation date of FHA’s changes in the monthly mortgage insurance premium as well as the Up Front Mortgage Insurance Premium (UFMIP). As you may know, Congress passed H.R. 5981 which increased the statutory limit on monthly mortgage insurance 1.55 percent. This does not mean the monthly mortgage insurance premium will increase to 1.55 percent, but does mean HUD has the authority go to as high as 1.55 percent. Currently, HUD has the statutory authority to charge up to 3.0 percent on the UFMIP but only charges 2.25 percent.
A few days after the passage of H.R. 5981, Commissioner Stevens, Federal Housing Commissioner, released a statement which included the following:
"It is our intention that effective on September 7, 2010, FHA’s upfront mortgage insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85-90 basis points on amortization terms greater than 15 years². A Mortgagee Letter will be forthcoming once President Obama signs the bill into law…"
Notice the words “intention” and “mortgagee letter will be forthcoming”. A few days later, Deputy Assistant Secretary, Vicki Bott, released a statement, which included the following:
"Last week, FHA Commissioner David H. Stevens announced plans for implementing FHA’s new mortgage insurance premium structure. As we work to publish a Mortgagee Letter, it is our intention to announce that based on industry feedback and our desire to have this change implemented successfully in the marketplace, FHA will make the premium fee changes on all new case numbers effective October 4, 2010."
Again, notice “intention” and “as we work to publish a mortgagee letter.” In the release, Deputy Assistant Secretary Bott clarified that HUD’s intention was to simultaneously decrease the UPFMIP to 1.0 percent and increase the monthly MIP to 85-90 basis points on amortization periods over 15 years.
Bottom line…we still do not know the exact details of the change including the implementation date or the amount. We will post the final details as soon as we see the mortgage letter announcing the change.
A few days after the passage of H.R. 5981, Commissioner Stevens, Federal Housing Commissioner, released a statement which included the following:
"It is our intention that effective on September 7, 2010, FHA’s upfront mortgage insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85-90 basis points on amortization terms greater than 15 years². A Mortgagee Letter will be forthcoming once President Obama signs the bill into law…"
Notice the words “intention” and “mortgagee letter will be forthcoming”. A few days later, Deputy Assistant Secretary, Vicki Bott, released a statement, which included the following:
"Last week, FHA Commissioner David H. Stevens announced plans for implementing FHA’s new mortgage insurance premium structure. As we work to publish a Mortgagee Letter, it is our intention to announce that based on industry feedback and our desire to have this change implemented successfully in the marketplace, FHA will make the premium fee changes on all new case numbers effective October 4, 2010."
Again, notice “intention” and “as we work to publish a mortgagee letter.” In the release, Deputy Assistant Secretary Bott clarified that HUD’s intention was to simultaneously decrease the UPFMIP to 1.0 percent and increase the monthly MIP to 85-90 basis points on amortization periods over 15 years.
Bottom line…we still do not know the exact details of the change including the implementation date or the amount. We will post the final details as soon as we see the mortgage letter announcing the change.
Friday, June 4, 2010
HUD called, and They Want You To Call Them Back
Well, maybe someone from HUD didn't actually call . . . but they did do a press release and they do want to hear from you. The press release calls for feedback on RESPA's prohibition against the "required use" of affiliated settlement service providers.
The press release goes onto say that "It is a violation of RESPA when a consumer is required to use a particular mortgage lender, title company, or other settlement service provider that is affiliated with another business in their mortgage transaction. However, whether a consumer is 'required to use' a particular affiliated service provider when they are offered a discount or some other incentive is less obvious."
The issue that is plaguing HUD and the public who is trying to strictly follow the rule is where the line is supposed to be drawn between what is and what isn't "required use."
HUD reminded the public of its purpose, to "prevent kickbacks for referrals that increase costs of settlement services and to encourage shopping for settlement services. They are still comitted to the cause, but they are seeking insight from both the public and industry as to where to draw the line.
Current statute reads: "Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service. However, the offering of a package or (combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process."
You can email in your comments and view the entire press release by visiting HUD's website. Get involved!
The press release goes onto say that "It is a violation of RESPA when a consumer is required to use a particular mortgage lender, title company, or other settlement service provider that is affiliated with another business in their mortgage transaction. However, whether a consumer is 'required to use' a particular affiliated service provider when they are offered a discount or some other incentive is less obvious."
The issue that is plaguing HUD and the public who is trying to strictly follow the rule is where the line is supposed to be drawn between what is and what isn't "required use."
HUD reminded the public of its purpose, to "prevent kickbacks for referrals that increase costs of settlement services and to encourage shopping for settlement services. They are still comitted to the cause, but they are seeking insight from both the public and industry as to where to draw the line.
Current statute reads: "Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service. However, the offering of a package or (combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process."
You can email in your comments and view the entire press release by visiting HUD's website. Get involved!
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