New Home Loan Limits Take Effect

The Federal Housing Finance Agency’s new loan limits for 2020 have gone into effect; Fannie Mae and Freddie Mac, which are operated by the FHFA, began backing larger loans last week when the new year started. The cap on Fannie and Freddie loans has increased to $510,400 from 2019’s $484,350 limit.

View a breakdown of loan limits by county for Fannie and Freddie.

The Federal Housing Administration also increased its loan limit to $331,760, which is a $17,000 increase from 2019. In about 70 designated high-cost counties, the FHA’s 2020 loan limit has climbed to $765,600, a $40,000 increase from 2019. Alaska, Hawaii, Guam, and the U.S. Virgin Islands have higher limit ceilings than the rest of the country, the FHA says. Those areas have a 2020 FHA loan limit of $1,148,400.

View a breakdown of loan limits by county for the FHA.

Source: “FHA, Fannie Mae, Freddie Mac Are All Now Backing Larger Loans,” HousingWire (Jan. 2, 2020)

HUD, FHA Urge Home Inspections

Starting Sept. 14, the U.S. Department of Housing and Urban Development is including a mandate that instructs lenders to inform borrowers when they first meet to get a home inspection prior to purchasing a home. The mandate will be added to the HUD/Federal Housing Administration Single Family Policy Handbook and will include a document called “For Your Protection, Get a Home Inspection.”

“We are proud to provide critical inspection information for this handbook to help home buyers protect themselves,” says Frank Lesh, American Society of Home Inspectors, executive director. “Owning a home is one of the biggest financial investments in a person’s life, and a home inspection can help prevent costly problems.”  We agree!

Source: “HUD and FHA Urge Buyers to Have Homes Inspected Before Purchase,” RISMedia (Aug. 31, 2015)

It’s Becoming Easier for Buyers to Get a Mortgage

Lenders are showing signs of loosening up when it comes to home buyers seeking a mortgage. The Mortgage Bankers Association’s Mortgage Credit Availability Index ticked up slight in April, following an increase the previous month too. Increases in the index are indicative of an overall loosening of credit.

MBA’s index shows that mortgage credit availability has increased consistently over the last several months, coinciding with recent announcements from the federal government of programs that have been designed to open the credit box. Fannie Mae and Freddie Mac’s move to back 3 percent down payment loans as well as the Federal Housing Administration’s action to reduce its mortgage insurance premiums have helped ease credit, MBA Chief Mike Fratantoni says.

Other government offerings also helped to ease credit even more in the latest report, reflecting April data, MBA notes.

Source: “MBA: It Keeps Getting Easier to Get a Mortgage,” HousingWire (May 12, 2015) and “REALTORS® Confidence Index,” National Association of REALTORS® (April 2015)

Why Buyers May Find Mortgages Easier to Get

Good news for potential home shoppers: A Mortgage Bankers Association index shows lender requirements regarding credit scores, down payments, and other key terms are finally loosening up. Some lenders are even expanding the types of mortgages they offer. These moves come after years of lenders tightening loan requirements.

The newly-released MBA index shows recent improvements in lending are mostly tied to the government’s efforts to ease regulations and improve affordability in the housing market. For example, mortgage financing giant Fannie Mae is now allowing purchases of conventional mortgages that have down payments as low as 3 percent; Freddie Mac is planning to do the same for mortgages closed on or after March 23.

Also, the Federal Housing Administration, which insures loans with down payments as low as 3.5 percent, reduced its upfront mortgage insurance premiums last month, which is expanding eligibility for home purchases to thousands of potential home shoppers.

Source: “Lenders Begin Easing Requirements to get a Mortgage,” The Los Angeles Times (Feb. 22, 2015)

HUD: ‘2015 Is Year of Housing Opportunity’

Housing and Urban Development Secretary Julian Castro sees big opportunity in the housing market this year, with the easing of credit opening the door to more buyers.

“I see 2015 as the year of housing opportunity, particularly home ownership,” Castro told CNN.  “A good example of that is the reduction in the FHA mortgage premium.”

Castro points to the recent move of the Federal Housing Administration, which reduced its insurance premiums from 1.35 percent to 0.85 percent. The reduction is expected to amount to about $900 per year for borrowers. Castro says the reduction in premiums will likely spur a quarter of a million more home buyers in the next three years.

Also in expanding home loan opportunities, mortgage financing giants Fannie Mae and Freddie Mac recently announced they will allow FHA mortgage premium to qualify for loans with down payments as low as 3 percent.

Source: “2015: The Year to Buy a House,” CNNMoney (Feb. 2, 2015)

New Mortgage Rules Roll Out – What is the Impact?

New mortgage rules that set out to protect borrowers against risky lending practices. One of the biggest changes is that borrowers will likely need to show more proof that they can actually afford the mortgage they’re applying for.

Here are two main terms to know from the new rules:

“Ability-to-repay” rule: Mortgage lenders must ensure borrowers can actually afford their loans over the long term. Applicants’ income, assets, savings, and debt against their monthly house payments will be more closely scrutinized. Borrowers likely will need to produce “even more tax records, pay stubs, and bank and investment account information,” USA Today reports.

Qualified Mortgage: Borrowers who meet the ability-to-repay requirements may be eligible.  QM loans must meet at least some of the following guidelines: They cannot contain risky features, such as terms that exceed 30 years or interest-only payments; carry more than 3 percent in upfront points and fees for loans above $100,000; or push a borrowers’ total debt above 43 percent of their monthly income unless the loan qualifies to be backed by Fannie Mae, Freddie Mac, the FHA, or a small lender.

The Consumer Financial Protection Bureau estimates that about 92 percent of mortgages currently meet QM requirements.

Still, the real estate and mortgage industry, the CFPB, and others will watch implementation of the new rules closely to determine whether they make it more difficult for borrowers to qualify for mortgages.

Source: “New Mortgage Rules Aim to Prevent Risky Loans,” USA Today (Jan. 9, 2014)

HUD, VA Help 9,000 Homeless Vets Find Homes

The U.S. Housing and Urban Development and Veterans Affairs have teamed up to provide housing for about 9,000 homeless veterans nationwide who live on the streets or in shelters.

HUD and the VA will provide $60 million to local public housing agencies to distribute the grants to homeless vets that will provide rental assistance. The vets participating will be able to rent privately owned housing and will contribute no more than 30 percent of their income toward rent.

“Our veterans have answered the call of duty,” says HUD Secretary Shaun Donovan. “That’s why our nation has its own duty — to help homeless servicemen and women rejoin the very communities they have given so much to protect. These grants make it possible to help more veterans obtain housing, bringing us steps closer to our goal of ending veteran homelessness by 2015.”

According to data by HUD and VA, a single night in January 2012 showed that 62,619 veterans were homeless.

Source: “HUD and VA Team up: Provide Homes to 9,000 Homeless Vets,” RISMedia (June 1, 2013)

HUD announces nationwide “first-look program”

The U.S. Dept. of Housing and Urban Development recently announced a new agreement with the nation’s top mortgage lenders to offer select state and local governments, including California, and nonprofit organizations a “first look” or right of first refusal to purchase foreclosed homes before making the properties available to private investors.

The National First Look Program is the first-ever public-private partnership agreement between HUD and the National Community Stabilization Trust and is intended to give communities participating in HUD’s Neighborhood Stabilization Program  a brief exclusive opportunity to purchase bank-owned properties in certain neighborhoods so the homes can be rehabilitated, rented, resold, or demolished. 

More information at: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-187

FHA premium increases postponed to Oct. 4

The Federal Housing Administration (FHA) announced last week it is pushing back the implementation date for new premium structures on FHA-insured mortgages to Oct. 4 from the original date of Sept. 7. 

Following FHA Commissioner David Stevens’ recent announcement that up-front premiums for FHA-insured mortgages would be reduced beginning Sept. 7 from 2.25 percent to 1 percent, lenders expressed concerns that they would need more than five weeks to update loan disclosures and computer systems.

FHA previously raised up-front premiums from 1.75 percent to 2.25 percent in April to cope with rising losses on FHA-guaranteed loans. The Obama administration promised to reduce up-front premiums if Congress gave it the authority to raise annual premiums beyond their statutory limit of 0.55 percent.  HR 5981, legislation raising the statutory limit on annual premiums to 1.55 percent, was approved by lawmakers on Aug. 4 and has been signed by President Obama. 

More information at:  http://portal.hud.gov/portal/page/portal/ver-1/HUD/federal_housing_administration/docs/BottStatementPremiumChanges.pdf

FHA Loan Changes!

On January 20, 2010, FHA announced major changes to ensure its long-term financial soundness.  FHA is trying to balance three fundamental objectives: 1) financial soundness of the FHA insurance fund   ensuring that its capital ratio returns above 2 percent, 2) fulfilling its mission of serving borrowers not adequately served by the private sector and 3) facilitating the recovery of the housing industry and the over-all economy.

FHA announced changes in the following areas:
The upfront mortgage insurance premium (UFMIP) will increase to 2.25 percent up from 1.75 percent.  Contrary to reports, FHA will continue to allow the financing of the UFMIP.
Borrowers with a credit score below 580 will be required to have at least a 10 percent down payment.  The minimum down payment will remain at 3.5 percent for all other borrowers.
FHA will seek legislative authority to increase the annual premium (currently capped at .55 percent).  Over time, increasing the annual premium may allow FHA to reduce the up-front premium.
Seller concessions will be reduced to 3 percent from 6 percent.

FHA will make the following lender enforcement changes:
FHA will implement credit watch terminations at lender underwriting.
Public reporting of lender performance through scorecard system will be implemented.
FHA will implement, through notice and comment, indemnification against lenders.  Indemnification will be expanded beyond fraud and misrepresentation.
FHA will seek legislative authority to enforce indemnifications against direct endorsed (DE) lenders.
FHA will seek legislative authority to sanction lenders nationwide based on performance of local branch.

This is encouraging news for home loans not only for Placerville, (El Dorado County), California, but nationwide. Hopefully, FHA will also reconsider and change or delete some of their recent regulations that have caused negative impacts, plus new loan processing delays.