Alan's Blog on Mortgage Information by Alan Gross

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FHA Relaxes Property Flip Regulation For One Year

January 15th, 2010 9:52 PM

FHA Relaxes Property Flip Regulation For One Year

Effective for all sales contracts dated on or after February 1, 2010.

Certain property may be resold and financed using FHA insured financing without waiting 90 days.

FHA has temporarily waived the 90 day wait period, on certain transactions. These recently purchased homes may be sold and financed with FHA insurance.

· Private sellers and investors are now eligible to take advantage of this waiver.
· These transactions must be arms-length, with no identity of interest between the buyer and the seller or other parties participating in the sales transaction.
· In cases where the sales price is 20% or greater than the seller’s acquisition, the lender must justify the increase in value with supporting documentation of renovation, repair and rehabilitation work.
o If no such work was performed the appraiser must provide an appropriate explanation of the increase in property value since the prior title transfer.
o The lender must order a property inspection and provide that report to the home buyer. Buyer’s may be charged for the cost of this inspection.

There is much more detail to this wavier and if you have transactions meeting this guideline you are advised to read the waiver in its entirety here:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

This should free up the sale of a number of properties that where being hampered by the 90 day restriction.

Alan Gross
Home Office: 240.813.0614
Email: HomeMortgageAdvisor@gmail.com
Web: www.mtg-info.net

Posted by Alan Gross on January 15th, 2010 9:52 PMPost a Comment (0)

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FHA To Increase Insurance Premiums & Down Payments

January 20th, 2010 11:21 AM

FHA To Increase Insurance Premiums & Some Down Payments

The Federal Housing Administration (FHA) has announced plans to increase the amount of up-front cash paid by new borrowers and to require higher down payments from those with the poorest credit.

A little history - Prior to 1983 FHA loans required the borrower to pay an annual mortgage insurance premium (MIP) of 0.50% of the principal balance per year. In 1983 President Reagan initiated and additional premium known as Up Front MIP (UFMIP), paid in a lump sum at closing. The premium equaled 2.25% of the loan amount and is due at closing. The premium could be financed into the loan. On January 1, 2001 the UFMIP was reduced to 1.50%. On October 1, 2008 the UFMIP was raised to 1.75% for purchase transactions.

FHA regulations required the borrower to invest 3% of the sales price which included a minimum 2.25% down payment. The seller was allowed to contribute up to 6% of sales price towards the borrowers settlement costs. Effective January 1, 2009 the down payment requirement was raised to 3.5%.

The new policy changes would increase the UFMIP from the current 1.75% to 2.25% of the loan amount. Borrowers with a credit score of less than 580 will have to make a down payment of at least 10%. It should be noted that the policy of most lenders is to require at least a 620 credit score to be approved for an FHA loan. Under the proposal the amount the seller can contribute to the borrowers closing costs will be reduced from 6% to 3%. The new polices are expected to be implemented starting this spring.

To see FHA's annuncement go to: FHA Press Release

Before the "subprime crises" FHA's loan volume had fallen substantially. FHA current backs 30 percent of all loans for home purchases and 20 percent of refinanced loans.

Alan Gross
Home Office: 240.813.0614
Email: HomeMortgageAdvisor@gmail.com
Web: www.mtg-info.net

Posted by Alan Gross on January 20th, 2010 11:21 AMPost a Comment (0)

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