As a borrower it may be a bit more difficult to obtain FHA financing in 2010.  Today the FHA announced a series of changes to the FHA insured mortgage program aimed at increasing home ownership in underserved neighborhoods.  The program has become the most widely used program for first-time buyers or move up buyers with down payments less than 10%.

In the FHA official announcement today it spelled out a series of changes that will increase the capital fund of FHA as an effort hedge against the increase of defaulting mortgages.  Fortunately FHA retained the minimum down payment of 3.5%.  The changes will consist of the following:

• Increased mortgage insurance premium by .5% (from 1.75% to 2.25%).
• Seller concessions (credit towards closing costs) reduced from 6% to 3%.
• Increased enforcement on FHA lenders/banks.
• 580 FICO score now required to qualify for 3.5% down payment program (Scores below will require 10% down payment.  However, nearly all FHA lenders nationwide have a minimum 620 FICO score overlay).

The changes come as a necessary precaution for FHA to avoid asking the federal government for assistance to sustain it's mortgage insurance for homeowners.  FHA does not actually service the mortgages issued by FHA, but insures the loans serviced by the banks.

As a borrower, the increased mortgage insurance premium will have a small impact on your monthly payment and the limit of 3% seller concessions may require you to come to closing with a bit more cash to cover the exceeding amount of closing costs and prepaid items.

The increased enforcement on FHA lenders/banks will be determined by each banks servicing and performance of current FHA loans.  As a precaution to retain the ability to fund FHA loans we will see increased lender guideline overlays in the near future.  A guideline overlay is an individual lender/bank guideline that is usually more stringent than the standard loan guidelines.  As a result guidelines may vary significantly between banks.

We will likely see an increase in FHA loan denials in 2010.  A borrower's FHA loan may be denied simply because it was sent to the wrong FHA lender.  If you have questions about an FHA loan or want to know if you qualify feel free to give me a call or email me.  As a broker, Landmark Mortgage has several options for FHA lenders.  It will be important for borrowers to work with a knowledgeable broker who has experience and options for each FHA loan applicant.  As a loan officer I will find the right fit for your specific loan profile.

FHA will issue a Mortgagee Letter tomorrow announcing the exact dates of implementation.

FHA lenders are beginning to implement some new guideline overlays.  Watch the video and be prepared to coach your clients accordingly:

Ok, so Taylor, Bean and Whitaker has officially announced the ceasing of all origination operations.  If you are a Realtor, please make sure you're clients are placed somewhere else quickly.  Again, none of my loans in process are being underwritten by Taylor Bean.

If you have any questions or need help finding a suitable source for your loan or a clients loan, please don't hesitate to contact me.

TBW Press Release:

PRESS RELEASE

TAYLOR BEAN MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATETLY

Ocala, Florida – Taylor, Bean & Whitaker Mortgage Corp. (“TBW”) received notification on August 4, 2009 from the U.S  Department of Housing and Urban Development,  Freddie Mac and Ginnie Mae (the “Agencies”) that it was being terminated and/or suspended as an approved seller and/or servicer for each of those respective federal agencies.  TBW has unsuccessfully sought to have the termination/suspension decisions of each of those agencies reversed.    As a result of these actions, TBW must cease all origination operations effective immediately.  Regrettably, TBW will not be able to close or fund any mortgage loans currently pending in its pipeline. TBW is cooperating with each of the Agencies with respect to its servicing operations and expects to continue to service mortgage loans as it restructures its business in the wake of these events.  We understand that this could have a significant impact on our valued employees, customers and counterparties, and are very disappointed that a less drastic option is unavailable.

Yesterday FHA announced it's suspension of Taylor, Bean and Whitaker's FHA origination.  The action came after Taylor Bean failed to file required annual financial reports.  Although FHA will allow Taylor Bean to appeal it's action within 30 days, the Government National Mortgage Association (GNMA) has immediately terminated Taylor Bean's registration with it's MBS pools. Taylor Bean has been a primary outlet for manufactured homes and HUD's FHA 203k rehabilitation loan.

If you're a Realtor or a borrower with a loan currently in process and you're aware of it being underwritten by Taylor Bean please contact your loan officer immediately to seek a backup plan or to seek an alternative lender immediately.  Please note, that none of my files in process are in Taylor Bean's pipeline.

Below is HUD's News Release:

HUD No. 09-145 Brian Sullivan (202) 708-0685 www.hud.gov/news/

For Release Tuesday August 4, 2009

FHA SUSPENDS TAYLOR, BEAN & WHITAKER MORTGAGE CORP. AND PROPOSES TO SANCTION TWO TOP OFFICIALS
Ginnie Mae Issues Default Notice and Transfers Portfolio

WASHINGTON – The Federal Housing Administration (FHA) today suspended Taylor, Bean and Whitaker Mortgage Corporation (TBW) of Ocala, Florida, thereby preventing the Company from originating and underwriting new FHA-insured mortgages. The Government National Mortgage Association (Ginnie Mae) is also defaulting and terminating TBW as an issuer in its Mortgage-Backed Securities (MBS) program and is ending TBW's ability to continue to service Ginnie Mae securities. This means that, effective immediately, TBW will not be able to issue Ginnie Mae securities, and Ginnie Mae will take control of TBW's nearly $25 billion Ginnie Mae portfolio.

FHA and Ginnie Mae are imposing these actions because TBW failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor even though the auditor ceased its financial examination after discovering certain irregular transactions that raised concerns of fraud. FHA's suspension is also based on TBW's failure to disclose, and its false certifications concealing, that it was the subject of two examinations into its business practices in the past year.

"Today, we suspend one company but there is a very clear message that should be heard throughout the FHA lending world – operate within our standards or we won't do business with you," said HUD Secretary Shaun Donovan.

FHA Commissioner David Stevens said, "TBW failed to provide FHA with financial records that help us to protect the integrity of our insurance fund and our ability to continue a 75-year track record of promoting, preserving and protecting the American Dream. We were also troubled that the Company not only failed to disclose it was a target of a multi-state examination and a separate action by the Commonwealth of Kentucky, but then falsely certified that it had not been sanctioned by any state. FHA won't tolerate irresponsible lending practices."

Ginnie Mae President Joseph Murin said, "I would like to reassure TBW's customers whose loans serve as collateral for Ginnie Mae securities that, although this action will result in a new servicer, the transition will be seamless for them."

TBW's immediate suspension is for a temporary period pending the completion of an investigation by HUD's Office of Inspector General, an ongoing review by the Department's Office of Housing, and any legal proceedings that may ensue. TBW is the third largest direct endorsement lender of FHA-insured loans and the eighth largest issuer of Ginnie Mae mortgage-backed securities. FHA decided that TBW's immediate suspension is in the best interest of the public and is necessary to protect the financial interests of the Department.

TBW may appeal its immediate suspension by submitting a written request for a hearing before an Administrative Law Judge within 30 days. Such a request will not delay the action FHA is announcing today.

In conjunction with TBW's suspension, HUD sent notices of proposed debarment to TBW's Chief Executive Officer, Paul R. Allen, and TBW's President, Ray Bowman. Mr. Allen's proposed debarment alleges that he submitted false and/or misleading information to Ginnie Mae regarding TBW's delay in submitting its audited financial reports for fiscal year ending on March 31, 2009. Mr. Bowman's proposed debarment alleges that he submitted two false certifications to HUD on TBW's Yearly Verification Report. Mr. Allen and Mr. Bowman have thirty days to contest the proposed debarments.

###

HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws.

Ginnie Mae is a wholly-owned government corporation within the U.S. Department of Housing and Urban Development. Ginnie Mae pioneered the mortgage-backed security (MBS), guaranteeing the very first security in 1971. An MBS enables a mortgage lender to aggregate and sell mortgage loans as a security to investors. Ginnie Mae securities carry the full faith and credit of the United States Government, which means that, even in difficult times, an investment in Ginnie Mae is one of the safest an investor can make.

More information about HUD and Ginnie Mae is available on the Internet at www.hud.gov, espanol.hud.gov and www.ginniemae.gov

Have you wanted to buy a home and finance-in some improvements?  Well now is your chance!  For years the department of Housing and Urban Development (HUD) has offered the FHA 203k FHA rehabilitation program.  As the mortgage industry expanded in the early 2000's FHA simply became less desirable as other lenders offered programs that were more affordable.  However, we now stand in a market heavily saturated with FHA loan applications.

The FHA 203k streamline rehabilitation program allows a borrower who is purchasing or refinance to include cosmetic improvements in the loan.  I've heard hundreds of clients say, "this house is perfect, it only needs some cosmetic TLC".  The problem is the money may not ever be available for them to actually complete the improvements.  The FHA 203k rehabilitation loan can be the answer for many of these buyers looking to put a little money towards improvements during a purchase.

Improvements of the property cannot alter the structure of the home (i.e. moving a doorway or tearing down a wall), but can include many updates that include: appliances, flooring, paint, windows, etc.

The key to this program is being completely educated on the process.  Not only do you need to understand how the financing program works, but you also need what improvements will actually raise the value of your home.  Working with a knowledgeable Realtor will help you in determining the potential for work to be done.

I will soon have a detailed description of this program on my blog.  Please contact me today if you might be the slightest bit interested in learning more – 503.798.9183 – email Conrad.

FHA has increased loan limits yet again.  The 2008 stimulus raised our loan limits in Marion and Polk counties, but when 2009 hit we saw them go down to the previous levels.  It took the passing of the new stimulus to get them back up.  So at this point (and I say that because this industry is ever-changing), the maximum loan limit in Marion and Polk county is $295,000.  With a minimum down payment of 3.5% the maximum purchase price will be $305,699.

It's great to see that limit come back up since there is such a large supply of new construction listings in that price range.

To see the full list of counties in Oregon download the 2009 FHA Loan Limits.

As we have seen the mortgage industry change in 2008, the FHA home loan has become increasingly popular.  The program offers a great opportunity for purchase with little money down and a refinance with great rates.

HUD (The Department of Housing and Urban Development) announced new loan limits this week.  Surprisingly, HUD decided to reduce the loan limits in many areas including most of Oregon.  The new changes will take affect January 1, 2009. Marion and Polk counties will be reduced to $271,050.  Please see the chart below for specific counties.

If you have questions about the FHA home loan program please don't hesitate to email me at conrad@landmarkmortgage.com.

A couple of weeks ago I mentioned the FHA minimum down payment would be changed to 3.5% effective October 1, 2008.  The Department of Housing and Urban Development (HUD) has postponed the change to FHA minimum down payment until January 1, 2009.  So for now, the down payment remains at 3%.

As the banking system has undergone some obvious changes in 2008, FHA has become one of the most chosen products for clients looking for a low down payment.  The VA home loan and USDA rural housing are the two programs still offering 100% financing.

2008 has brought a significant amount of changes to the mortgage business.  We have seen banks tighten up lending patterns by eliminating high risk programs and adjusting guidelines.  With banks veering far from the traditional style of underwriting for mortgages the necessity for change has been needed for quite some time.

Through the midst of all this change, the Department of Housing and Urban Development (HUD) has been making changes to the FHA loan program to benefit homeowners.  In order to keep the FHA program available to homeowners and potential homeowners, HUD has also had to make some necessary changes.  As of October 1, 2008 there will be several changes to the program.  The three most significant changes to the program include: down payment assistance program elimination, minimum down payment increase, and mortgage insurance premium increase.

For years HUD has allowed a borrower for an FHA loan to use a non-profit down payment assistance program.  At least for now the program will not allow a borrower to use these programs.

The minimum down payment for an FHA purchase will increase from 3% to 3.5%.

HUD also requires borrower paid mortgage insurance.  The upfront premium will be increased from 1.5% to 1.75% and the monthly premium increased from .50% to .55%.

There will be more information regarding changes released in October, so stay tuned for more information.

Today the Federal government announced a rescue plan after a historic week in our financial markets.  Earlier in the week Lehman Brothers declared bankruptcy, Merrill Lynch was sold, and AIG was bailed out by the government.  Central banks from around the world poured hundreds of billions of dollars into the banking system in hopes to calm the storm.  Despite the surge of news and volatility in the financial markets this week, mortgage rates had little change.

The rescue plan announced today by the Treasury spoke of a broad plan.  A legislative proposal for lawmakers will be drafted by the Treasury this weekend.  The plan will likely include help from the Treasury to banks who have illiquid mortgage assets.  Buying the mortgage assets at a discount provides relief for the banks and will allow the government to provide help while forecasting a positive return.

Treasury Secretary Henry Paulson said, "I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion."

For more information about the Treasury's announcement visit www.bloomberg.com.