Why Choose an FHA Loan , fha home loan , fha mortgage , fha streamline All loans require a credit check on the borrower, and the FHA is no Even though the FHA is there to help low and middle-income families, they ... Even if you are not sure... http://www.loanrequirements.net 2012-02-23T00:13:38+01:00 text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/at-fha-odd-accounting-burnished-stevens.html An "unprecedented crackdown." That's how Commissioner David Stevens described a get-tough program that took place under him at the Federal Housing Administration from mid-2009 until April of this year. As part of the push, the FHA's Mortgage Review Board issued more administrative actions against lenders in Stevens' first year than it had in the prior eight years combined. "We take our responsibility to oversee lenders with the utmost seriousness," Stevens told a Senate subcommittee in 2010. When he resigned a year later to take over as head of the Mortgage Bankers Association - the primary lobby for the businesses he'd formerly overseen - Stevens cited the enforcement figures once again as evidence that he had not gone easy on the industry. In contrast to the image Stevens so carefully groomed, his record as a disciplinarian is based largely on a vastly eased definition of enforcement that inflated the agency's action count. That's according to a review of statistics from the Department of Housing and Urban Development, which oversees the FHA. Statistics indicate that the vast majority of matters brought to the mortgagee review board under Stevens were not "fact-based" ones involving misconduct harmful to borrowers or the FHA's insurance fund. Instead, 92% of actions under Stevens were "recertification cases," which generally involve small lenders and brokers who failed to submit paperwork on time - often because they have ceased originating FHA loans or gone out of business. The FHA review board's small office simply mailed registration violation notices to slews of marginal players and then submitted their names en masse to the review board for official action, sources familiar with its activities say. The FHA staff pushed hard for substantive enforcement against major lenders, HUD sources say, but many became convinced that its leaders were more interested in creating a perception of getting tough than... text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/audit-of-15-fha-lenders-finds-problems-run-deep.html The Department of Housing and Urban Development's inspector general found "systemic problems" in lenders' compliance with underwriting requirements for Federal Housing Administration loans. Kim Randall, director of the inspector general's civil fraud division, recommended in a report Wednesday that 15 mortgage lenders singled out a year ago for review because of their high default rates pay $23.4 million in potential fines for improperly underwriting FHA-insured loans. The underwriting review of the lenders also found that HUD had "missed critical opportunities to recover losses" to the FHA insurance fund. HUD does not have a formal process for reviewing all claims paid on defaulted mortgages or even on the riskiest of loans, "resulting in unrecovered losses to the insurance fund for loans that never should have been insured," Randall wrote in the 21-page report. "The FHA insurance fund suffered an unacceptable percentage of loans defaulting and resulting in claims that never should have caused losses." The fund is expected to pay $20 billion in claims this year, up from $14.5 billion last year. HUD singled out the lenders for high default rates on FHA loans compared to the national average and because foreclosures had occurred early in the life of the loans. A few of the lenders have since gone out of business. In all, the 15 lenders submitted $794.3 million in FHA insurance claims from 2007 to 2009. The lenders had endorsed more than 183,000 FHA loans valued at a combined $31.3 billion from 2005 to 2009. As part of its review, known as Operation Watchdog, the inspector general selected between 12 and 20 loans in claim status from each lender to determine whether the company had performed due diligence and complied with FHA requirements. In a highly unusual rebuke, the inspector general's office blamed HUD for failing to follow previous recommendations that it review missed payments during the first... text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/ccagw-fuming-over-fha-loan-limit-increase.html Today, the Council for Citizens Against Government Waste (CCAGW) issued a statement of stern opposition to the inclusion of an amendment to the fiscal year (FY) 2012 Agriculture, Commerce, Justice, and Science, and Transportation/Housing and Urban Development (THUD) Appropriations “minibus” that would allow the Federal Housing Administration (FHA) to increase its eligible loan limit to $729,750. The Senate version of the bill included an amendment by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.) that would raise the cap on loans that the FHA can insure and that Fannie Mae and Freddie Mac can purchase to $729,750, while the House bill had no such provision. The loan limit expired at the end of September and was reduced to $625,000, which was still much higher than the $417,000 limit prior to the housing crash of 2008. The “compromise” contained in the minibus to be voted on this week would increase only the FHA loan limit, which exposes taxpayers to the very real threat of another costly bailout. The FHA provides lenders with a 100 percent government guarantee against the loans it insures, meaning that taxpayers are already on the hook for 100 percent of more than $1 trillion in FHA loan guarantees. Meanwhile, the FHA’s reserves have plunged to razor-thin levels. Loans with high loan-to-value ratios for larger amounts carry higher risks of default. According to its annual report to Congress, which was released this morning, there is a 50 percent chance that the FHA will require a taxpayer bailout in the near future. For the third year in a row, FHA’s cash reserves are below the congressionally-mandated minimal capital requirement of 2 percent of projected losses. Last year, the FHA reserves were also razor thin, 0.5 percent, and this year they have dropped to 0.24 percent. The FHA has $2.6... text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/fha-eases-streamline-rules.html The Federal Housing Administration is making it easier for existing FHA borrowers to qualify for streamlined refinancings. The FHA has revised the "net benefit test" allowing more borrowers to lower principal and interest payments even though they are facing higher taxes and insurance payments. The agency also is putting the brakes on lenders packing closing costs, discount points or other financing costs into the loan amount. Lenders "must not use an appraisal" to increase the loan amount beyond the up-front mortgage insurance premium, according to a letter issued to lenders on Monday. The changes take effect in 60 days. The FHA's portfolio of streamline refis is plagued by early defaults and negative equity. Many borrowers with subprime and exotic mortgages refinanced into FHA loans in 2008 and jumped to streamline refis in 2009 to take advantage of lower rates. The FHA completed 329,400 streamline refis in the year that ended Sept. 30, 2009; within six months 5.5% of the loans were 90 days or more past due. The agency clamped down on streamline refis in January 2010 with new requirements for loan seasoning, payment history, income verification and net benefit test. text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/fha-single-family-endorsements-decline.html Federal Housing Administration endorsements of single-family loans fell 24% in the first quarter compared with the fourth quarter, as the slowdown in lending is even affecting low-down-payment products. The FHA endorsed $58.2 billion in one-to-four family loans in the first quarter, down from $76.9 billion in the prior quarter (based on the calendar year not the fiscal year). The monthly FHA Single-Family Outlook report released Thursday showed lenders originated $18.3 billion in FHA-insured loans in March, up 8% from February. Purchase mortgages made up $10.1 billion of loan production along with $1.8 billion in FHA-insured reverse mortgages known as home equity conversion mortgages. HECM endorsements by the FHA were stuck at $1.8 billion each month of the first quarter. However, the new HECM Saver product has been gaining traction. Reverse mortgage lenders originated 409 HECM Savers in March, up from 165 in January. Since the product was launched last October, the FHA has endorsed 964 HECM Savers. The HECM Saver is attractive to seniors because it has a nominal 0.01% up-front fee, compared with the 2% up-front fee on the standard HECM product. Meanwhile, very few lenders are using the FHA's refinancing products to help underwater borrowers. Over the six-month period that ended March 31, lenders have made 159 Hope for Homeowners loans and 107 FHA Short Refinancing loans. Both products require principal writedowns so the borrowers end up with a loan-to-value ratio below 100%. text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/fhas-purchase-role-slipping.html The Federal Housing Administration has been the "go to" lending program of choice for homebuyers - especially first-timers - for the past few years. But that may be changing because of tighter government credit standards and higher mortgage insurance premiums. Last year, the FHA insured nearly 40% of all purchase mortgages, or roughly $200 billion, according to analysts at Keefe, Bruyette & Woods. The latest government report showed the FHA endorsed only $8.3 billion in purchase mortgages in February, which represents 46,900 loans, down 36% from a year earlier. The FHA raised its annual premium by 25 basis points in October and another 25-basis-point rise goes into effect April 18. From Sept. 30 through February, lenders originated, on average, 61,400 FHA-insured loans per month, compared with 93,600 a month during the same five-month period a year earlier. "Now that refinances are going away, it is going to expose the weakness of the purchase market," said Brian Chappelle of Potomac Partners in Washington. The mortgage banking consultant said that Fannie Mae, Freddie Mac and the FHA guaranteed 2.1 million purchase mortgages in 2009 and another 1.9 million in 2010. "They are on pace to do a lot less in 2011 and that is truly troubling," Chappelle said. Last week, the Census Bureau said new-home sales fell 17% in February to the lowest level since the government started tracking sales in 1968. The National Association of Home Builders' chief economist, David Crowe, said that buyers are "reluctant" to get back into the market and the ones that are sometimes find it difficult to get a mortgage. "I hear from builders that buyers cannot get mortgages even with solid credit scores and down payments," Crowe said. Publicly traded home builders raised concerns about tighter mortgage credit in many of their fourth-quarter securities filings. They said lenders are "demanding more stringent... text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/higher-borrowing-limit-for-fha-loans.html Today, I've got answers to reader questions on home and student loans, but first an update from Congress, which was considering reinstating higher limits on government-backed home mortgages in about 670 high-cost counties, including most of the Bay Area. The maximum loan backed by Fannie Mae, Freddie Mac and the Federal Housing Administration in these areas had dropped to $625,500 from $729,750 on Oct. 1. Late Thursday, Congress voted to reinstate the higher limit on FHA loans through 2013, but not on Fannie and Freddie loans. It was a compromise between some Republicans who want the government out of the mortgage market and legislators from areas with high housing costs. The move was a little surprising, considering that FHA was created to provide credit for marginal borrowers and makes loans with as little as 3.5 percent down. "This is all about members of Congress having trouble letting Fannie or Freddie take on any more risk. They are both politically toxic and (legislators) felt pressure to reraise the limit, so this was the politically expedient way of doing it," says Edward Mills, an analyst with FBR Capital Markets. Unlike Fannie and Freddie, FHA has not needed a taxpayer bailout, although according to one report, there is a 50-50 chance it could in the next couple of years, says Keith Gumbinger, a vice president with HSH. Borrowers in qualifying counties who need loans between $625,000 and $729,750 will have two options: an FHA loan or a jumbo loan in the private market. FHA requires initial and annual mortgage insurance premiums, but it could offer rates that are perhaps 0.75 percent lower than private-market jumbos, Gumbinger says. He adds that private jumbos will require higher credit scores and down payments but that a larger down payment in the private market may mean a lower cumulative mortgage insurance cost. text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/higher-loan-limits-now-available-from-fha.html After a year characterized by grumpy partisan gridlock, Congress came up with a Thanksgiving compromise that could change the mortgage choices of buyers and refinancers in more than 660 markets across the country: It raised maximum loan limits for the Federal Housing Administration while leaving loan ceilings untouched for Fannie Mae and Freddie Mac. President Obama signed the bill into law, and consumers should expect to see its effects shortly, after lenders receive the official "mortgage letter" from the FHA outlining the changes. In effect, this may make the FHA the go-to financing option for borrowers needing loans up to $729,750 - with down payments as low as 3.5 percent - in high-cost areas of California, the Washington region, New York and New Jersey, and in scattered counties in other states including Massachusetts, Florida and North Carolina. Fannie Mae- and Freddie Mac-eligible loans in those areas, meanwhile, stay capped at $625,500. Equally important, the new plan raises the FHA ceilings for purchasers in hundreds of more moderately priced markets. Seattle area buyers' maximum FHA loan amount jumped to $567,500, while the Fannie Mae-Freddie Mac ceiling remains at $506,000. In Hartford, Conn., the limit for FHA is now $440,000, up from $320,850; Fannie and Freddie remain capped at $417,000. Buyers with low down payments in Portland, Ore., who previously had been limited to FHA mortgages of $362,250, can borrow up to $418,750 under the new plan, $1,500 more than they can get from Fannie and Freddie, which generally require steeper down payments and higher credit scores. The new loan ceilings in hundreds of markets are at the core of the compromise: They raise the maximum FHA loan amount in all areas of the country to 125 percent of the local median home-sale price, while leaving Fannie Mae's and Freddie Mac's limit at 115 percent of the... text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/homeowners-with-fha-loans-who-sell-or-refinance-should-try-to-schedule-closings-at-months-end.html Could the federal government'sbooming FHA mortgage program be forcing homeowners to pay tens of millions of dollars of extra interest charges when they sell their houses or refinance loans? Critics say yes. The government says the critics aren't providing the full picture. Those critics include Sen. Ben Cardin (D-Md.), who is sponsoring legislation that would prohibit FHA lenders from collecting a full month's worth of interest from sellers and refinancers who pay off their mortgages - go to settlement - before the final day of the month. No other major source of financing, not Fannie Mae, Freddie Mac or the Veterans Affairs Department, requires interest payments from borrowers beyond the date they pay off their loans. On an FHA loan, if you sell your house and go to closing early in the month, you are charged interest through the rest of the month. To illustrate: Say you pay off a $200,000 FHA-insured mortgage on the fifth day of April. You'll be charged an extra $820 to cover interest for the month's remaining days, according to estimates prepared by the National Association of Realtors, which supports Cardin's bill. If the same loan is paid off on April 15, the interest levy would total $492. Where does the money go? Ted Tozer, president of the Government National Mortgage Association, which bundles FHA loans into bonds and sells them to investors, says it flows to bondholders, who are guaranteed payment of interest for the full month even if the balance is paid off much earlier. Tozer maintains that the direct payment approach has afforded FHA borrowers a slight discount on their initial interest rates, probably in the range of 0.10 percent to 0.15 percent, compared with conventional loans. But critics charge that the extra interest taken from FHA sellers and refinancers exerts a far greater personal economic impact - often cutting... text/html 2011-12-26T23:59:17+01:00 http://www.loanrequirements.net http://www.loanrequirements.net/general/limiting-loan-limits.html Even if Congress and the Obama administration allow federal loan limits to fall back to precrisis levels in October, as expected, the limits will still be higher than they need to be, professors at The George Washington University School of Business have determined. "In the wake of significant declines in home prices, we believe the [Federal Housing Administration] could reduce its loan limits by approximately 50% and still almost entirely satisfy its target market," said Robert Van Order, co-author of the FHA assessment report from the university's Center for Real Estate and Urban Analysis. "That would reduce its currently large market share, which is difficult for FHA to manage," he said. Reducing its maximum loan limits by nearly 50% would still enable the FHA to serve 95% of its historic target market - first-time, minority and low-income homebuyers, the report said. To serve this target market, the report concluded that the FHA only needs a market share of somewhere between 9% and 15% of total mortgage originations. Current estimates put its market share at about 30% of originations. Congress and the Obama administration have proposed allowing the maximum loan limits on mortgages insured by the FHA and purchased or securitized by Fannie Mae and Freddie Mac to expire in October. That means in the most expensive markets the limit will fall to $625,500 from $729,750. Congress first raised the limits on FHA, Freddie Mac and Fannie Mae loans in 2008, and since February 2009, the limits have been extended by Congress on an annual basis. According to an analysis by the Department of Housing and Urban Development, the impact from this change will be small, with only about 3% of loans endorsed in 2010, and 2% of loans endorsed so far in 2011, being affected. "FHA's expansion played a major role in keeping the housing market afloat during the...