Posted by MW/VA on 8/29/08 7:20am
Msg #262512

FHA loans

Lately, with the mortgage crisis, there has been a flurry of FHA loans. It seems that almost everything being underwritten is FHA, and I can understand why. I've heard new guidelines for FHA and RM's go into effect September 1. Anyone know anything about this?

Reply by LisaWI on 8/29/08 8:30am
Msg #262521

I havent read anything about the new guidelines, but they have been talking about this for months on AR. Because of the discussions on AR, I knew FHA loans were going to be happening more often.

Hope this isnt advertising, but you might find your answers on AR.

Reply by MW/VA on 8/29/08 8:33am
Msg #262522

Who is AR?

Reply by Linda_H/FL on 8/29/08 8:35am
Msg #262524

Marilyn, sent you a p/m... n/m

Reply by LisaWI on 8/29/08 8:37am
Msg #262525

Re: FHA loans-Check your PM. n/m

Reply by MW/VA on 8/29/08 8:38am
Msg #262526

Re: FHA loans-Check your PM.

Thanks, I know that site & will check there.

Reply by Leslie_Mo on 8/29/08 8:48am
Msg #262529

Who is AR? Could you pm me also?

Reply by NCLisa on 8/29/08 8:45am
Msg #262527

The new guidelines go into effect Oct. 1, 2008

All the gifting programs such as Nehimiah and Ameridream will no longer be allowed. Borrowers will be required to put at least 3% down for a new purchase.

There are some very good things, some ok things, and some very bad things about the new guidelines. After they start, my business partner will loose her biggest client, as without the gifting programs, his 15 closings amonth will go away.

Reply by NCLisa on 8/29/08 8:45am
Msg #262528

The new guidelines go into effect Oct. 1, 2008

All the gifting programs such as Nehimiah and Ameridream will no longer be allowed. Borrowers will be required to put at least 3% down for a new purchase.

There are some very good things, some ok things, and some very bad things about the new guidelines. After they start, my business partner will loose her biggest client, as without the gifting programs, his 15 closings amonth will go away.

Reply by DianeCipa on 8/29/08 10:10am
Msg #262535

Don't lose heart.

I've been doing FHAs since 1976 and it was a terrific program before the gift down payment assistance was started and it will be a terrific program when it's gone. Loan Officers will just need to adjust how they think and how they structure the deals. PLUS the FHA said [I read it somewhere!]they intend to create some type of middle ground rules that will give borrowers ease of entry but eliminate the outside charity service charge. There'll likely be a lull followed by a new normalcy. Your partner might do 10 instead of 15 but it's better than nothing.

Reply by NCLisa on 8/29/08 10:29am
Msg #262536

Re: Don't lose heart.

Yes, but attorneys still do most purchase closings in NC. They don't allow creativity on the HUD, because they "don't get it" most of the time. I've never met an RE attorney that could wrap themselves around the grey areas of hud prep in situations. Most attorneys will not allow something rather than risk that call to the Bar.

Reply by DianeCipa on 8/29/08 12:44pm
Msg #262573

There are no grey areas on a HUD.

I'm not implying that loan officers need to find ways to be untruthful. I am saying that within the guidelines of the regular FHA program, it's easier to get a mortgage than through conventional prime and most borrowers can manage it.

The down payment requirements are very low and blood relatives are able to provide gifts. These gifts have been largely ignored lately because if the easy gifting by the seller.

Reply by NCLisa on 8/29/08 1:59pm
Msg #262588

Re: There are no grey areas on a HUD.

LOL, you don't live in NC. These people's families don't have 3% to gift them. They are land rich, cash poor. The farms are no longer being worked, and all the textile plants have moved out of NC to other countries. The farmers give/sell to try to make ends meet their kids or other relatives an acre or 2 or 10. The kids/relative puts a doublewide or modular on it. All they have is that farm land that isn't making them money anymore, and no way is a developer going to want to buy anything is those areas. Again, they are land rich, and cash poor.

Reply by Philip Johnson on 8/29/08 2:36pm
Msg #262596

That would suprise my folks in Asheville.

That in the research triangle area in which you live that the folks are thread bare. The Raleigh-Durham-Chapel Hill area is one of the highest wage per capita areas in the country rivaling even some of those bay areas in California. I'm sure if someone wants to buy a house in the area they can work up the down payment and if they can't maybe they should wait till they can.

Reply by jba/fl on 8/29/08 3:02pm
Msg #262604

Re: That would suprise my folks in Asheville.

By that statement alone, I would have to conclude that all folks in Western Washington are rich as many work for MS, Boeing, and a great deal of R&D goes on too. Is that true?

Reply by Philip Johnson on 8/29/08 3:13pm
Msg #262608

All is a big word

If you look at the Puget sound area where these businesses are, you will find a much larger wage per capita than in my area of SW Washington. She was talking about the research triangle area of NC which I would think rivals the Puget sound or if you wish the Palm beach region in wages and or walking around money.

Reply by jba/fl on 8/29/08 3:41pm
Msg #262619

Re: All is a big word - Yes it is

But no matter what area of the country, there are pockets of depressed incomes. Palm Beach still has it's share - think of the people who work for the mega-rich cleaning their houses and servicing their other needs.

I am from Seattle, and as much as I would like to return, I can no longer afford to live there. Outlying areas in my price range are too far to commute. Even Everett, where my family lives now, is being taxed into oblivion, so should my mom leave me her house, I would liquidate after selling all the old growth timber. Then perhaps I could move to Index, or Mt Vernon, but that puts me into harsher environs. Farmers and dairys are struggling everywhere, and in the SW corner of WA you undoubtedly have pockets of poverty, or official government definition of poverty. It is everywhere. NC outside of Asheville is gorgeous, but a summertime area for tourists. Go there in the winter, talk to the people, they will tell you. I spent 4 weeks up there talking to locals and they all pretty much told me I needed to have my own business year round if I expected to make it up there. I don't think SA qualifies at this time either, leaving me in FL until the market changes. Can't always go by per capita - the rich bring the poor to levels they aspire and don't reach.

Reply by Philip Johnson on 8/29/08 3:57pm
Msg #262622

Cutting old growth timber in King county,certainly

you jest? Try to cut a sapling here and once you finish talking to everyone involved it will be old growth and so will you.

Reply by DianeCipa on 8/29/08 3:33pm
Msg #262617

that works

A family member is permitted to give a gift of equity. So they sell the land and a portion of the value is credited as a gift on the HUD. It is all above board and perfectly acceptable to the FHA.

Reply by DianeCipa on 8/29/08 3:36pm
Msg #262618

There are almosts always

legal and ethical ways within the underwriting guidelines to make transactions work - if you have realistic expectations of value and a credit history that meets the minimum standards.

Reply by MikeC/NY on 8/29/08 9:07pm
Msg #262663

New FHA rules

FHA changes go into effect on October 1.

First major change is that the minimum down-payment goes from 3% to 3.5%

Second major change is that the down-payment can no longer be gifted - Mom and Dad can't just give them that money, there has to be a documented loan. As far as I've been able to determine from my mortgage guy, closing costs can still be gifted. Seems to me there's some wiggle room there...

Third major change is that the maximum amount of a loan that qualifies for the best interest rate is increasing to somewhere north of $600K (I think it's around $625K, but couldn't swear to it).

According to my mortgage guy, all of this is for FHA loans APPROVED on or after October 1 - if the loan is approved before that date, it can still close later than that under the old rules.

Reply by DianeCipa on 8/30/08 10:14am
Msg #262715

Re: New FHA rules

I believe strongly that your loan buy is incorrect on the gift issue. I'd be interested to see the mortgagee letter.

Reply by MikeC/NY on 8/30/08 10:44pm
Msg #262779

Re: New FHA rules

"I believe strongly that your loan buy is incorrect on the gift issue."

No, I don't think he is - read section 2113 of the Housing and Economic Recovery Act. The down payment must be in cash or funds BORROWED - not gifted - from family. It has to be a lien against the property. All other sources of funds for down payment are excluded. This is also ending the "seller-funded down payment assistance" programs that have sprung up in the past year or so, where the money was being channeled through a 501(c)(3) corporation.

Here's a link to the text of the relevant section of the Act:

http://tinyurl.com/5pfnm4