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HECM-LOAN-RULES-FHA-LOANSApril 1st of 2012 will not be a good April Fool’s joke – once again FHA has been looking at their overall solvency concerns and has deteremined they need to pass along the added costs to the new borrowers.

The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount.  This increase applies regardless of the amortization term or LTV ratio.  FHA will continue to permit financing of this charge into the mortgage.  This change is effective for case numbers assigned on or after April 1, 2012.  Example: Loan Amount = 100,000.00 new Upfront Mortgage Insurance Premium is 1.75% = 1,750.00 being financed into new loan.

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent.  This change is effective for case numbers assigned on or after April 1, 2012.  FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or after June 1, 2012. UPDATE: Here is the HUD LINK

So for quick examples and here is the easiest equation. Take  your loan amount 100,000.00 time new Monthly Mortgage Insurance Cost of 1.25% = 1,250.00 then divide this number by 12 to give you the Monthly Mtg Ins Premium Cost = 104.17 per month vs. the old MI factor of 1.15% = 1,150.00 / 12 = 95.83 per month.

Now these are all numbers based on if you are only putting the 3.5% minimum investment down for this type of loan.

Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.

Should you have any questions please give contact me.

Mortgage-Insurance

Mortgage Insurance Tax Deduction

Going forward Mortgage Insurance will no longer be able to be a line item deduction after 12/31/2011. As a Mortgage Insurance Company has reminded us: United Guaranty MI company. “MI tax deductibility is scheduled to lapse at midnight, December 31, 2011, now’s the time to expedite them to retain this benefit for your borrowers who qualify! MI tax deductibility will also lapse for FHA and VA loans, which were extended under the same law as private MI.”

As we found out last week, g-fees for new agency loans will be going up to pay for the two-month payroll tax cut.Under the “unintended consequences” banner analysts were quick to point out that, given the increase is scheduled for ten years, Fannie Mae and Freddie Mac are not going away any time soon unless the government comes up with the money elsewhere. F&F will not absorb this increase, nor will lenders; it will, of course, be passed on to borrowers. (The bill also will raise the annual insurance premium borrowers pay on FHA loans by one-tenth of a percent.) The increased g-fee, which makes it difficult for Congress to work on efforts to shut down Fannie and Freddie, based on current rates and a $200,000 loan, will cost the agency borrower about $11 per month. “These institutions, which have been so costly to Americans and are so necessary to the housing recovery, should not be the piggy bank for future arbitrary tax policy,” Dave Stevens (MBA) said. Due to their government ownership, investors still view their (and FHA/VA) MBS’s as safer investments than those offered by private firms. The law allows FHFA to phase in the fee over two years.
So, if you were lucky enough to close your home loan before 12/30/2011 Congratulations!

*As always seek a qualified CPA who can further assist you.* This is not to be construed as tax advice, informational purposes only!

We are hoping that the House of Representatives will continue to extend this tax credit to home buyers, as this is a benefit when you purchase a home and have less than 20% down payment. Make sure you contact your local Representative, Congressman, Senator, or local delgate. We need to extend this tax credit / deduction! As this will only help our real estate markets

Should you have any questions please contact me.

In case some of you were not able to make it to the online web discussion – here is one of the biggest items we targeted on. VA loan and Risk Assessments:

Last Week’s Questions & Answers: 12/20/2011

Q: Did you know that there have been updates in DU to the Credit Risk Assessment for VA Loan casefiles? 

A: During the weekend of  Dec. 17, 2011, there were updates to DU for VA loan casefiles and evaluating
credit risk assessment. You may see loans impacted as follows:

  • Overall improved credit characteristics for loan
    casefiles may receive an Approve recommendation
  • A change in the underwriting recommendation for some
    loan casefiles. For example, some loan casefiles that previously received an Approve recommendation may now receive a Refer recommendation, particularly ones with back-end debt-to-income ratios over 45%.
  • Reduced Approve recommendation rates. The overall
    reduction may vary by customer depending on the credit characteristics of the VA loan casefiles submitted to DU.

VA Loan casefiles created on or after the weekend of Dec 17, will be evaluated using the new credit risk assessment. In addition, VA loan casefiles created prior to Dec 17, and resubmitted to DU for any reason (i.e. change in appraised value) on or after the weekend of Dec 17, will be evaluated using the new credit risk assessment if there are any changes to any key credit characteristics of the loan casefile (e.g. LTV).

When we run to find out if a home buyer for a VA Loan will qualify we run it through an automated underwriting system. This will give us specific criteria and tolerances for our loan approvals.

 

Should you have any questions please contact me.

VA just released their new loan limits for Seattle, Snohomish, Everett, Tacoma, Lynnwood, Shoreline Area and Surrounding Counties:

King: $458,850 | Snohomish $458,850 | San Juan $432400 | Pierce $458,850

This will allow for 100% Financing for qualifying miltiary servicemen and women.

http://www.benefits.va.gov/HOMELOANS/docs/Loan_Limits_2012_Dec_2011.pdf

Let me of service to you as you served our country! Thank you


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