FHA Up Front and Monthly MIP Changes happening on 10-04-2010

Time is running out to secure the lower monthly FHA premiums!

FHA is increasing their monthly premium starting October 4th!

Click on the title above for the actual FHA Mortgagee Newsletter!

Article from DS NEWS that offers some hope

New Bill Calls for Refinancing of 30 Million GSE Mortgages
By: Carrie Bay 09/28/2010

Legislation to stabilize the foreclosure crisis through the federal government’s conservatorship of Fannie Mae and Freddie Mac was introduced in the U.S. House of Representatives Tuesday by Congressman Dennis Cardoza (D-California).

The Housing Opportunity and Mortgage Equity (HOME) Act would require Fannie and Freddie to allow borrowers to refinance their mortgages by locking in today’s record-low interest rates for longer fixed-term loans. The legislation would affect up to 30 million mortgages held or backed by the two GSEs.

To fund the program, Fannie and Freddie would issue new mortgage-backed securities (MBS) to fund the refinanced mortgages and use the proceeds to pay off the existing mortgages.

Fannie and Freddie would receive the same cash flow to cover default risk that they do now, passing along the reductions in financing costs to borrowers. Borrowers that qualify for the program would be able to refinance without facing penalty fees.

According to Rep. Cardoza, the measure would help stabilize the housing market by decreasing the inventory of foreclosed homes and reducing declines in property values from issues surrounding blight and abandonment.

At the same time, he argues that those with mortgages backed by Fannie and Freddie would have additional disposable income, providing a direct economic stimulus.

“No solution to date has addressed both foreclosure prevention and the decline of home equity, Cardoza said in a statement. “The reality is the housing crisis has spread far beyond the subprime market, hindering our economic recovery.”

Cardoza criticized the administration’s current housing programs for not being strong enough to make a dent in the worst foreclosure crisis in U.S. history.

“Until we see a program that cuts to the heart of the recession, we will continue to see little growth in our economy, families losing their homes, and lifetime investments with lost equity,” Cardoza said.

The legislation was initially introduced in January 2009. It has been modified based on new input Cardoza received from the House Financial Services Committee and several well-reputed economists, including Christopher Mayer, senior vice dean of Columbia Business School, and Mark Zandi, chief economist for Moody’s Analytics.

Cardoza says the proposal has gained increased interest as more economists realize that measures aimed at addressing the foreclosure meltdown have not been sufficient.

“If we allow housing to go into a free fall, everyone loses: taxpayers will have more bailouts, homeowners will watch their homes continue to decline in value, local communities will struggle to fund their schools. Everyone loses,” Mayer said. “Housing is an important part of what is holding back the economy. The government has a chance to help housing without harming the deficit. We should take it.”

Zandi added, “With mortgage rates near record lows, the quickest and most effective way policymakers can help the economy is to facilitate more mortgage refinancing. The HOME Act does this at little or no cost to taxpayers.”

©2010 DS News. All Rights Reserved.

The Pre-Approval Process

In our last 3 Insider Mortgage Tips we discussed the
3 components lenders look at in order to make a determination
of your ability to obtain a mortgage.

In this Insider Mortgage Secrets Tip, we will discuss the
process of getting approved for a loan BEFORE you start
shopping for your new home.

Do You Have A Thousand Dollars To Simply Throw Away?

I know this may sound like a very silly question but that
is exactly what happens every day to unsuspecting buyers
who do not get pre-approved for a loan BEFORE they go
house hunting.

Let me explain with a typical scenario...

You decide it is time to move so you find a realtor and
start looking for a home. After some house hunting you
find the perfect home and make an offer which is accepted.

Now you must meet with a lender to obtain a mortgage for
this home. When you apply for your loan the lender will
request a check for the appraisal and credit report. It is
also a very good idea to have your home inspected. This is
another fee that you will be required to pay for when the
service is rendered.

So, approximately 7 to 10 days after your contract was
accepted by the seller you will be required to spend this
$1000.00 or more.

Whether Your Loan Is Approved Or Denied These Funds Are
Not Refunded!

THE RIGHT WAY...

The proper procedure is to meet with a lender and get your
loan pre-approved BEFORE you go house hunting. Aside from
avoiding the unpleasant situation just described above there are
other benefits to having your loan in place as your first
step in the process.

In this pre-approval meeting we can establish what your
comfort level is for monthly payments as well as the
amount of funds you can comfortably use for the
transaction and we can then use these figures to recommend the
appropriate program.

In a seller's market where there are many more buyers in
the market than there are homes for sale this can give you
a much needed edge. When the seller knows your loan is
already pre-approved your contract has a better chance of
being accepted than the one from the buyer who has not yet
met with the lender and may or may not be able to get a
loan.

If you would like to get pre-approved and have your money
waiting for you BEFORE you go house hunting please call me
at 916-960-5900 for a No-Obligation Consultation.

In our next issue we will cover the appraisal and what your
home is worth.

Is a down payment really needed?

This Home Buying Guide is brought to you by:

United Commonwealth Mortgage, Inc
916-960-5900

One of the biggest barriers to home ownership in the
country is the money needed to buy a home. The money you
need is broken down into 2 categories: downpayment and
settlement costs. Your downpayment will vary depending on
which loan program you choose.

The three major loan programs are:

FHA - Federal Housing Administration

VA - Veterans Affairs Loan

Conventional

Each of these programs has its own loan limits, down payment
requirements and qualifying guidelines which do occasionally
change so please contact our office for the most up-to-date information.

Real estate closing practices vary widely from state to
state and even county to county but normally fall between
4-7% of your purchase price. Where you live will determine
exactly what you will have to pay.

Even if you are not required to escrow money for taxes,
you may want to set aside this amount to assure that you
will be able to pay those tax bills when they fall due.

You can get a good idea of what applies to your specific
area by giving us a call at 916-960-5900 or by filling
out the Contact Us form at:

http://yourfixedratelender.com/contact.htm

Remember, all lenders and brokers are required to provide
you with a Good Faith Estimate detailing the services you
may be required to get and pay for in connection with your
loan.

This Good Faith Estimate will give you a way to compare
loans and see what your closing costs would be. Click the
link below to find a list of coded names that describe the
different fees, which may be associated with the services
previously mentioned. These codes and names correspond to
those found on the HUD-1 Settlement Statement.

Lenders will want to see that you have had these funds in
the bank for the past 60-90 days and will request your
last 2 months bank statements.

If you do not have a lot of money available to buy a home,
here are some ideas:

1. Borrow against your 401(k)
2. Withdraw money from your 401(k)
3. Get a gift from a relative
4. Ask the seller to help with closing costs
5. Get a grant from a non-profit organization

What If None Of These Sources Are Available?

The good news is that we have several programs that will
allow you to purchase a home even if you truly have no funds.

No...this is not like the infomercials.

In the past few years, with homes appreciating rapidly
across the country, lenders have come out with new
products to address these issues.

It is still possible that we may be able to offer you a loan that
allows you to finance 100% (or almost 100%) of the purchase
price of your home.

Call us at 916-960-5900 to arrange a private No-Cost and
No-Obligation Consultation so we can review your situation and
recommend the programs that will be best suited to your needs.

In our next lesson we will cover getting pre-approved and
the CORRECT pre-approval process...

---------------------------------------------------------

If you would like to get started now please fill out a
Secure Online Application and we will contact you to
set up your free consultation and get you into the
home of your dreams with the best terms available...
regardless of your credit!

http://yourfixedratelender.com/application

Or if you have questions, call us or submit them here:

http://yourfixedratelender.com/contact.htm

I hope you have enjoyed this step of our guide.
We have many creative loan programs to fit your needs.

Please contact us at 916-960-5900 to schedule
your FREE No-Obligation Consultation where we
will meet to tailor a program to fit your needs
and comfort level for monthly payments and investments.

Until our next lesson,

United Commonwealth Mortgage, Inc

FHA Short Pay Refi Update

In early August 2010 FHA announced a new product The FHA Short Refinance” effective September 2010. This refinance loan program is for homeowners who owe more on their mortgage than their home is worth.
FHA Short Refi Requirements:

 Current on existing mortgage
 Must owe more on mortgage(s) than home is worth
 Must have a middle credit score of 500 or greater
 Must qualify for standard FHA underwriting requirements
 Home cannot be an investment property or second home - must be a primary
residence
 Homeowners existing mortgage company must agree to write off at least 10%
of the existing mortgage principal balance owed
 The combined loan balances between a new FHA first mortgage (due to the
short refinance) and an existing second mortgage balance (if one exists and
they agree to the short refi) cannot exceed 115% of the home's value
 The first mortgage being refinanced cannot be an existing FHA mortgage
 The new FHA short refi loan must not exceed 97.5% of the home's current
market value (yes you will have to get an appraisal on your home)

In reading this list, you may ask the question or be wondering whether your second mortgage lender will be interested in giving permission to do a FHA short refi. To address this concern, as it is a real concern, the US Department of Treasury will provide incentives to second mortgage holders who agree to partial or full release or extinguishment of their mortgage lien in a property.

FHA may slash costs on reverse mortgages

The Federal Housing Administration isn't talking publicly about it, but the agency may be getting ready to cut the upfront costs of reverse mortgages for some borrowers.
The agency also, however, may be reducing the amount seniors can borrow against their homes.
In a recent conference call with industry participants, FHA officials said they were finalizing plans to offer a home-equity conversion mortgage requiring almost no upfront mortgage insurance premium, according to the National Reverse Mortgage Lenders Assn. The FHA also may tinker with the traditional product in a way that increases the overall borrowing costs.

"HUD is looking at options to provide a lower-priced [home-equity conversion mortgage] option," said Lemar Wooley, a spokesman for the U.S. Housing and Urban Development Department. "We are still working out the details. Our basic plan is to make the product more attractive, while limiting FHA's exposure to risk."
A home-equity conversion mortgage is a federally guaranteed reverse mortgage designed to let homeowners 62 or older tap the equity in their homes. The loans and accrued interest don't have to be repaid until the owner sells the home, dies or fails to live there for one year, but the loans have traditionally carried significant upfront and annual expenses.

According to participants on the conference call, there would be two types of home-equity conversion mortgages beginning this fall: a "standard" loan and a "saver" loan.
The saver loan would have an upfront mortgage insurance premium of 0.01% of a home's value, but the amount that could be borrowed, known as the principal limit, would be reduced by at least 10%. That would lower the risk to the FHA, which guarantees the loans. Because a smaller amount could be borrowed, the saver loan could be marketed as an alternative to a home-equity line of credit to seniors on fixed incomes who can't make the monthly minimum interest payments required on such lines of credit.

Under the standard loan, the upfront mortgage insurance premium charged by the FHA would remain 2% of the property value (or a maximum of 2% of the FHA maximum loan limit of $625,500), and the principal limit would be cut 1% to 5% of a home's value, depending on the borrower's age.
For both loans, the monthly mortgage insurance premium, which is 0.5% of the mortgage balance for a traditional home-equity conversion mortgage, would increase to 1.25%.
"For someone who needs a chunk of money, but not a huge chunk, we believe this will significantly broaden the appeal," said Peter Bell, president of the National Reverse Mortgage Lenders Assn. "They're very smart changes."

In the last few months, several reverse mortgage lenders decreased origination fees and closing costs, partly to increase demand for the product and partly to pass along some of the profit they've made as investors scooped up the loans on the secondary market. The saver product would further reduce the upfront borrowing costs.
The National Council on Aging, which has advocated a more flexible reverse mortgage product for some time, views the changes as a sign that the industry is moving past the one-size-fits-all mentality.
However, the advocacy group also sees potential pitfalls.
"The more flexibility there is, the more chance there is to be talked into [something] that doesn't make sense," said Barbara Stucki, vice president of home-equity initiatives for the National Council on Aging.

VA News...

New VA Guidelines on Charges



The Department of Veterans Affairs announced new requirements concerning closing costs on the HUD-1 for loan applications taken on or after October 1, 2010. Lenders must itemize certain credits and title service charges. The itemization of credits and title charges can be combined with the required VA origination statement.
Itemization can be accomplished by providing an attachment to the HUD-1 and will enable VA reviewers to determine who paid what charges and to ensure veteran borrowers did not pay unallowable fees. The attachment may be a lender-created addendum or any standard addendum used by title companies. For title services and lenders title insurance, lenders will now be required to provide a breakout of the charges shown on line 1101, similar to the breakout required of line 801. More information is available in Circular 26-10-9 dated July 30, 2010 and the updated Circular dated August 6, 2010.

We keep up with all the latest changes, let us help you with your next home!

FHA Mortgage Insurance changes coming up!!

Upfront Premiums -FHA MIP Changes-

Effective for FHA loans for which the case number is assigned on or after October 4, 2010, for FHA traditional purchase and refinance products, the upfront premium, shown in basis points below, will be charged for all amortization terms.

Mortgage Type Upfront Premium Requirement
Purchase Money Mortgages and Full-Credit Qualifying Refinances 100 BPS
Streamline Refinances (all types) 100 BPS


Annual Premiums

Effective for FHA loans for which the case number is assigned on or after
October 4, 2010, FHA will increase the annual premiums collected on a monthly basis. For FHA traditional purchase and refinance products, the annual premium, shown in basis points below, is to be remitted on a monthly basis, and will be charged based on the initial loan-to-value ratio and length of the mortgage according to the following schedule:

LTV Annual Premiums for Loans > 15 Years
= or <>95 percent 90 BPS

The annual premium for amortization terms equal to or less than 15 years remains unchanged and is collected according to the following schedule.

LTV Annual Premiums for Loans = or < years =" or">90 percent 25 BPS

Speed Record!

Yes it's possible to close escrow on a FHA loan in less than 30 days! As a local Mortgage Broker, we are able to establish multiple relationships with several of the best lenders in the country. This means we can use our relationships to help you close fast. Our average FHA turn time is 2 days in underwriting and a total of 22 days from start to finish! Of course certain guidelines apply, why not call today! Let us break the speed record for you!!

United Commonwealth Mortgage

Work with a lender that offers you solutions! United Commonwealth Mortgage can get you answers fast and with accuracy! Call today! We are FHA experts!