Starting Monday, April 5, 2010, getting an FHA mortgage in Tucson and nationwide will be more expensive for borrowers.

In new guidelines set forth earlier this year, the FHA announced plans to raise additional revenue and reduce the overall risk of its mortgage portfolio. 

The changes include the following:

1. Increase Upfront Mortgage Insurance Premiums from 1.75% to 2.25% for everyone
2. A plan to reduce seller concessions from 6 percent to 3 percent
3. An increase in minimum downpayment for FICOs 580 or lower

For your own loan, to avoid being subject to higher loan costs, make sure to have your FHA Case Number assigned prior to Monday, April 5, 2010.  That means you’ll want to give a full mortgage application before the weekend so your lender can register your loan in time for the deadline.

But don’t leave your application to the last minute.

Friday is Good Friday so most banks will be closed. Your true FHA deadline, therefore, is Thursday April 1.

Also worth noting is that the FHA isn’t done with its changes.

In its policy statement, the group also announced its plans to petition Congress to raise monthly mortgage insurance premiums.  The FHA’s formal request, in summary:

1. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
2. Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It’s merely a request. And in the event that Congress does approves it, the FHA reserves the right to change its projections.  Either way, it means higher costs for consumers. 

The best plan, therefore, is to get your FHA mortgage into underwriting ahead of the switches because borrowing money will be harder, and more costly.

Important reminder on FHA upfront mortgage insurance premiums:

Homebuyers and Homeowners are reminded that effective on FHA loans for which the FHA case number is assigned on or after April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent. This policy change will increase premiums for purchase money (now 1.75%) and refinance transactions (now 1.50%) including FHA-to-FHA credit-qualifying and non-credit qualifying streamlined refinance transactions.

For more detailed information on this premium increase, please see HUD/FHA Mortgagee Letter 2010-02 at: 

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf

Please make every effort to get your contracts ratified or your refinance in process early in the week of March 29, 2010, since it is possible that FHA case numbers requested on Friday or Saturday may not be assigned prior to April 5, 2010, and therefore, be subject to the higher premium.

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage for all your mortgage needs! (520)-331-LEND.

I’ve received alot of calls asking me to summarize the “wassup in FHA?” Here’s quick run-down for your reference:

2/1       New condo rules begin.  All condos must show as “Approved” on the FHA website  https://entp.hud.gov/idapp/html/condlook.cfm. Select the HRAP/DELRAP option for searching.  I usually just enter the zip code and select “All”.  Many condos have different names or spellings and I find it helpful to check all of them in a zip code.  There aren’t that many.  No more “spot approvals” allowed by FHA. 

2/1       Effective until 2/1/2011 the 90 day flipping rule has been suspended.  HOWEVER, the loan must be an arm’s length transaction and if the value increases 20% over the seller’s acquisition price then we have to get a home inspection and justify all repairs, renovations, etc. with documentation.

2/15    HVCC rule applies to FHA loans.  The FHA Connection has been revised (which is what caused the delay in implementation). No more Originator-to-Appraiser communication allowed, just like with Conventional loans.

4/5       New up front MIP for all loans including streamline refinances is 2.25%. This will make every loan at least 1/2 point MORE EXPENSIVE.

Other changes “coming this summer to a Lender near you”… increased Monthly Mortgage Insurance and increased downpayment requirements for low-FICO borrowers. Standby for updates as they are announced.

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage in Tucson, Arizona for all your Mortgage needs!

It’s official! FHA is increasing the up-front mortgage insurance premium to shore up it’s finances. Beginning with case numbers assigned on Apri 5th, 2010 the fee increases from 1.75% to 2.25%. Almost as importantly, the fee for Streamline refinances increases from 1.50% to 2.25%. This makes the FHA loan 1/2 point more expensive than before.

As I’ve said before, FHA is balancing their shortfalls from yesterday’s defaults with tomorrow’s borrower.

The Monthly Mortgage Insurance factors will be increasing “this summer” but nothing official released yet. The remain the same for the time being…

Click here to see the official Mortgagee Letter

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage for all your Mortgage Needs!

In an attempt to recoup past losses, reduce the potential for future losses and sure up FHA’s sagging reserves a staggering series of changes will be implemented “soon”. Click here for article

First, and most immediate, the Up-Front MIP for all FHA loans will be increased from 1.75% to 2.25%. The start date for this increase will be announced today but Ianticipate it will begin with case numbers assigned starting February 1st. Following this in “the spring” will be an increase in the monthly MI fee as well.

Second, down payment requirements will be increase for 3 1/2% to 10% for “low FICO score borrowers” (under 580). This change is expected to be implemented “early summer”.

Third, the level of allowable “Seller Concessions” will be cut in half from 6% to 3%; this also will be implemented “early summer”.

Fourth, increased monitoring and enforcement on FHA lenders effective immediately.

These changes are H-U-G-E and will affect the entire market. While just loosening the anti-flipping rules 48 hours ago, this changes tighten – good for taxpayers, bad for sellers, buyers and the real estate markets.

For these and other breaking stories, stay in touch and call Todd Abelson and Tyler Ford at Sunstreet Mortgage in Tucson Arizona.