FHA Property Flipping Waiver Extended

FHA has extended their Property Flipping Waiver from February 1,2011 to December 31, 2011.



what is FHA Property Flipping Waiver?



Effective for purchase contracts dated February 1, 2010 and after, Borrowers may use FHA-insured financing to purchase previously foreclosed properties WITHOUT the 90-day waiting period:

HUD-owned properties
Bank-owned properties
Properties resold through private sales


This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.



To protect FHA Borrowers against predatory practices of flipping where properties are quickly resold at inflated prices, this waiver is limited to sales meeting ALL of the following requirements:

All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction

Seller must hold title to the property

LLCs, corporations or trusts that are serving as sellers were established and are operated in accordance with applicable state and Federal Law

No pattern of previous flipping activity exists for the subject property, as evidenced by multiple title transfers (more than 2) in the last 12 months as indicated on the Appraisal report

Property was marketed openly and fairly via MLS, auction, For Sale by Owner or developer marketing (assignment of contract not permitted)

If the sales price of the property is 20% or more above the seller's acquisition cost:
Increase in value must be justified by supporting documentation and/or a second appraisal verifying seller has completed sufficient legitimate renovation, repair and rehab work to substantiate the increase in value or in cases where no work is performed, the appraiser provides an appropriate explanation of the increase in value since prior transfer

Second appraisal is always required if 100% increase in purchase price

Property inspection is required and MUST be provided to the purchaser before closing,

Borrower will be charged for the inspection

Non-FHA approved inspectors or 203 k consultants are allowed

At a minimum the inspection must include ALL of the following:
Property structure, including foundation, floor, ceiling, walls and roof
Exterior, including siding, doors, windows, appurtenant structures such as decks and balconies, walkways and driveways
Roofing, plumbing systems, electrical systems, heating and air conditioning systems

All interiors
All insulation and ventilation systems as well as fireplaces and solid fuel burning appliances

Inspector must not have any interest in the property or relationship with the seller and must not receive compensation for the inspection from any party other than the lender.

Inspector may not compensate anyone for the referral, may not receive any compensation for referring or recommending contactors to perform any repairs recommended, and may not be involved in performing any repairs recommended by the inspection

You might be ablt to use tax credit ($8,000) IMMEDIATELY!

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.

FED cut the rate yesterday...

Ball park rates for the start of the day. May be an exciting roller coaster ride so, I'll try to keep you posted on any significant ups or downs in the rates...

Have a great Wednesday

30-year conventional: Loan $130,000-$175,000---5.125-5.50%
Loan $175,000-$230,000---5.00-5.375%
Loan $230,000 to max ($417,000) --- 4.875-5.25%

30-year FHA: Loan $90,000-130,000 --- 4.75-5.125%
Loan $130,000-170,000 -- 4.75-5.125%
Loan $170,000 to max -- 4.75-5.125%

15-year conventional: Loan $130,000-175,000 -- 4.875-5.25%
Loan $175,000-230,000 -- 4.75-5.125%
Loan $230,000 to max -- 4.75-5.125%

40-year conventional: Loan $130,000-175,000 -- 5.50-5.875%
Loan $175,000-230,000 -- 5.375-5.75%
Loan $230,000 to max -- 5.25-5.625%

30-year conventional jumbo: $417,000-$650,000 -- 5.75-6.125%
15-year conventional jumbo: $417,000-650,000 -- 5.875-6.25%

5/1 Arm cap 5/2/5: $130,000-175,000 -- 6.125-6.5%
$175,000-230,000 -- 4.625-5.00%
$230,000 to max -- 4.625-5.00%

3/1 Arm cap 2&6: 417,000-$650,000 -- 5.75-6.125%
5/1 Jumbo Arm - cap 5/2/5: $417,000 -- 5.875-6.25% (same as last week)

The Forecast

U.S. Economic Outlook

(PDF: 28KB)The recent action by the federal government in "taking over" the two GSEs could be the shot in the arm that the housing market needs.
http://www.realtor.org/research/reinsights/forecast

The Forecast: Charts(PDF:180KB)With the government's takeover of Fannie and Freddie, the spread between 10-year Treasuries and the 30-year fixed mortgage rate will surely narrow and hence result in lower mortgage rates.
A "Shot in the Arm" for the Housing Market
By Lawrence Yun, NAR Chief Economist

Home sales continue to edge up and down. Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings. Pending home sales (see page 3) declined in July, after rising in June. But the recent action by the federal government in "taking over" the two GSEs could be the shot in the arm that the housing market needs.

Even with the latest pullback in contract signings, pending home sales have been fairly stable on a national basis for nearly a year, with dramatic local market differences continuing. Contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets. The outer Washington, D.C., exurbs also are coming around very strongly. That bodes well for future home sales nationally.

Another factor is the attractiveness of FHA-mortgages. FHA is taking a more active role in serving a broad cross-section of home buyers, but it will take some time to fully get up to speed. There's been a surge in FHA mortgage applications. Interestingly, many people in high-cost areas aren't familiar with FHA programs. REALTORS® should be aware that they are one of the major sources of information about mortgage programs for their clients. They should familiarize themselves with this increasingly valuable program.

Still, there are many ambiguities in the marketplace. The economy is producing more, yet job cuts continue. GDP growth in the second quarter of this year was 3.3 percent. In fact, the last time GDP growth was negative was in the fourth quarter of last year - and that was before the unprecedented surge in oil prices. In spite of relatively healthy GDP growth, 84,000 non-farm payroll jobs were shed in August - more than most analysts (including me) expected. And those most recent job cuts have been across the board in all sectors.

Those job cuts help explain anemic consumer confidence. While consumer confidence rose in August, the Conference Board reports that its consumer confidence index stood at 56.9 for that month.. The reading suggests that for most Americans, the economy is basically in "neutral." A first-time home buyer tax credit - one of the provisions of the economic stimulus legislation passed and signed into law earlier in the summer - and lower interest rates on newly conforming jumbo loans favors consumers. But buyer confidence remains low. Even with the Treasury Department's direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent. The housing market outlook is very cloudy.

We often cite the real estate professional's mantra: all real estate is local. But economic conditions are also local. The speed and timing of a housing and economic recovery depends on local market conditions. Based on local market fundamentals, I expect robust home price growth in places like Denver over the next two years. Up until the weekend of September 12, I would have included Houston in that list as well, but given the recent damage wrought by Hurricane Ike we'll have to watch the Houston market closely to see how fast its economy recovers from the storm. In addition, the frequent reporting of multiple bids in California and Florida may be signaling a bottom in home prices in those areas. Nationally, home sales are stable now but are expected to increase in coming quarters.

A mix of Good and Bad News (Foreclosures)

Nationally, the rate of foreclosures started was up 20 basis points compared with that reported in the first quarter of 2008. In the second quarter of this year, the foreclosure starts rate increased from 0.54 percent to 0.67 percent for prime loans from a year ago. Foreclosures on subprime loans rose from 4.06 percent to 4.70 percent and from 0.50 percent to 0.65 percent for VA loans. FHA loans also posted an increase of 16 basis points in foreclosure starts -- from 0.87 percent to 1.03 percent. That increase follows a decline posted in the first quarter rate.

The foreclosure inventory rate also increased nationally for all loans, from 2.47 percent in the first quarter of 2008 to 2.75 percent in the second quarter of 2008. On a year-over-year basis, the foreclosure inventory rate increased 135 basis points (from 1.40 percent in the first quarter of 2008). The foreclosure inventory rate rose for all loans except FHA loans. The foreclosure inventory rate rose 20 basis points for prime loans, 107 basis points for subprime loans, and nine basis points for VA loans. Foreclosure inventory rates for FHA loans actually experienced a 16 basis point drop.

FHA Announces New Mortgage Insurance Premiums

FHA Announces New Mortgage Insurance Premiums
A Special FHA Announcement from FHA Expert Jeff Mifsud

In response to the passing of HR 3221, this update announces FHA's new Mortgage Insurance Premiums for the period of October 1st, 2008 through September 30th, 2009. FHA's Risk Based Premiums that went into effect on July 14th, 2008 will be on hold until October 1st, 2009.

The following information will be available on LTB's Legislative Updates page, as well as Jeff's Mifsud's website www.mseminars.com, where he offers one-of-a-kind FHA training to mortgage professionals.

Here are the 6 things you need to know about these changes...

1. Up-front Mortgage Insurance Premiums:

Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75%.
Streamline Refinances (all types) = 1.50%.
FHASecure (Delinquent Mortgagors) = 3.00%.
2. Monthly Mortgage Insurance Premiums:

For 30 year loans with LTV > 95%, monthly will be .55%.
For 30 year loans with LTV < 95%, monthly will be .50%.
For 15 year loans with LTV > 90%, monthly will be .25%.
For 15 year loans with LTV < 90%, monthly will not be required.
For FHASecure loans with LTV > 95%, monthly will be .55%.
For FHASecure loans with LTV < 95%, monthly will be .50%.
3. Mortgages with FHA case number assignments made on July 14, 2008, through and including September 30, 2008, shall maintain the risk-based premium structure for the life of the mortgage.

4. FHA will issue another notice that will formally advise when the moratorium is concluded and the premium pricing structure that should be followed once the moratorium ends.

5. Credit Scores:

Borrowers with credit scores below 500 will require an LTV of 90% or less.
Borrowers with 3 scores, the middle score is used.
Borrowers with 2 scores, the lowest score is used.
6. These premium changes apply to the following FHA loan programs: 203b (standard 1-4 unit property), 203k (rehab loan), and 234c (condominiums) and do not apply to FHA reverse mortgages.

We are still awaiting more changes in response to HR 3221 so watch for future updates.

For more information on this or other important FHA updates, go to www.mseminars.com, where you can contact Jeff Mifsud directly and sign up for his FHA newsletter.

Foreclosure rescue to pass Senate; House next

Struggling homeowners who can't afford their mortgages and banks facing big losses would get government help under a foreclosure rescue that has broad bipartisan support.

The plan is headed for Senate passage Friday, but faces a bumpy road, with the House planning a rewrite and the White House threatening a veto without major changes.

With the last procedural hurdles scaled Thursday, the package was on track for resounding approval in the Senate. It has drawn broad support in the Senate, reflecting widespread interest by lawmakers in both parties in sending election-year help to struggling homeowners facing tough economic times.

The centerpiece of the plan would let the Federal Housing Administration back up to $300 billion in new loans to give struggling homeowners more affordable, fixed-rate mortgages. It allows lenders who agree to take a substantial loss on the mortgages to reclaim at least some money and avoid a costly foreclosure.

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and an architect of the bill, said the few but significant revisions House leaders are seeking could be made in as little as one week. Key players are preparing for a week of intense negotiations to resolve differences on Capitol Hill and with the White House, with an eye toward producing a bill President Bush could sign later this month.

The measure includes a long-sought modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage giants. It also would provide $14.5 billion in housing tax breaks, including a credit of up to $8,000 for first-time home buyers.

Congressional Democrats are divided over important elements of the plan, including limits on loans the FHA may insure and Fannie Mae and Freddie Mac may buy. The Senate measure sets them at $625,000, while House leaders — including Speaker Nancy Pelosi, D-Calif., — want the cap as high as $730,000.

House leaders also oppose the immediate effective date of the Senate plan, preferring to phase in the new regulations for Fannie Mae and Freddie Mac over six months.

Another key point of dispute is $3.9 billion in the Senate measure for buying and rehabilitating foreclosed properties. The House's band of conservative "Blue Dog" Democrats oppose the money, arguing that it would swell the deficit unless paired with cuts or tax increases to cover the cost.

But many Democrats, particularly members of the Congressional Black Caucus, are fighting to keep the funding, which they say will help prevent the communities hardest hit by the housing crisis from sliding into blight.

The White House singled out the money in its veto threat, calling it a bailout for lenders who helped cause the mortgage meltdown.

Lawmakers and the Bush administration agree on the central concept behind the measure: allowing the government to backstop new mortgages for struggling homeowners.

To make it more palatable to Republicans, the Senate measure would take responsibility for any losses away from taxpayers and instead cover them by diverting an affordable housing fund drawn from Fannie Mae and Freddie Mac profits.

This is Not Your Father's FHA

NAR hears the concerns Realtors have about FHA loans - either they are either too cumbersome to process or that the higher loan limits aren't needed in their particular market.

The new reality is that FHA modernization, in addition to increased FHA loan limits, is designed to help Realtors do what they do best- put people into homes.

Consider that:

100% financing options are becoming a thing of the past, and FHA is becoming a major player for people buying a home or refinancing an existing one.


The homebuyer tax credit will attract active purchasers to the market and help stabilize housing prices.


It is projected that the FHA marketshare of new home loans will increase fivefold between 2007 and 2009.


Many Realtors are stuck thinking of the FHA of old - but FHA has streamlined its application process, and eliminated the requirement for a separate inspection. If you use a qualified FHA lender, processing an FHA loan is comparable to a conventional loan.


Even if your community is not a high cost area, raising the FHA and GSE loan limits will provide liquidity in the market and make mortgage money more available and affordable to borrowers nationwide.
This is Not Your Father's FHA. Throw in the new provision for tax credits and it is obvious that Realtor support for this bill is a no brainer. The Housing Stimulus bill being debated now includes FHA modernization.

Please call me if you are looking for FHA lenders: I know few who do fast FHA and Utah Housing loans.

Important Facts About FHA

1. A Borrowner can obtain financing while still in a Chapter 13 bankruptsy
2. Utah Housing (through the FHA program) will finance up to 103% of a home's value. In other words, you can finance most of the time, everything, no down payment is needed, and even closing costs.
3. Sweat Equity is allowed for new construcion.
4. Screens on windows are no longer required.
5. Termite inspections are no longer required unless specified by the appraiser.
6. Non-occupant co-borrowers are allowed.
7. All money to close is allowed to come from a gift.
8. New, temporary loan amounts in Salt Lake County were increased to $729,750

New FHA, Fannie Mae and Freddie Mac Loan Limits

My Dear Clients and Blog Readers: Further information is provided by Dick Gaylord, 2008 NAR President.

I know I have been mentioned this news before. Here it is some relief to our current market conditions, and it arrived today: the new FHA and Fannie Mae- Freddie Mac conforming loan limits have been released by the U.S. Department of Housing and Urban Development.

To find out the new limits in your area, simply click on this link: http://go-to.realtor.org/r/3OS1G5/C5JMU/ZB4YT4/DKPVD/J9A5D/B7/h, which will take you to the "mortgage limits" page at the HUD web site. On that page, enter your state and county information, chose the type of loan from the "Limit Type" drop-down box (FHA Forward, Fannie/Freddie or HECM). [Note: FHA Forward is what HUD is calling the temporary FHA loan limit.] Then click the "send" button at the bottom of the page. On the results page, you'll see the new loan limit for the type of loan you selected for your area.

You can also find a county-by-county listing of the new FHA and Fannie Mae-Freddie Mac loan limits at REALTOR.org by following this link: http://www.realtor.org/GAPublic.nsf/files/chart_hud_loan_limits_08.pdf/$FILE/chart_hud_loan_limits_08.pdf

The new loan limits for FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median prices, with a floor of $271,050 and $417,000, respectively, not to exceed $729,750.

Association is Realtors expect the impact of these loan limit increases on the housing market to be significant because of the infusion of capital into the mortgage market, which should result in lower interest rates across the board. In addition, there will be a direct impact on high-cost areas that previously required borrowers to take out costlier jumbo mortgages.

As NAR research points out, increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the mortgage market.

An economic impact study conducted by NAR in January 2008 estimated that increasing the GSE conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points.


HUD was mandated in the Economic Stimulus Act to publish new loan limits within 30 days of the bill's signing by President Bush on February 13. NAR strongly supported this economic stimulus package because of the relief we felt it would bring our members.

House Passes GSE & FHA Loan Limit

House Passes GSE and FHA Loan Limit Increases, Senate to Consider This Week On January 29, 2008, the House of Representatives passed H.R. 5140, the economic stimulus package. This bill, agreed to by the Administration includes several important housing provisions. These include increases in the loan limits for Fannie Mae and Freddie Mac and also FHA. The bipartisan vote of 385-35 demonstrates the overwhelming support for this proposal. The House and the administration view strengthening the housing market as key to improving the national economy. Here is what was included in the package:
The FHA limit will increase to as much as $729,750 in high cost areas (to 125% of local median home prices). This is a one year increase, pending final passage of FHA reform (which passed the House and Senate last year).
The GSE limit will be increased up to $729,750 for one year. Currently Fannie Mae and Freddie Mac are capped at $417,000. It appears that there will be a formula similar to that of FHA, with GSE loan limits increasing to 125% of the local median home price, but not to exceed $729,750. In addition, the package includes a bonus depreciation provision for leasehold improvements. This will allow 50% of the cost of a leasehold improvement placed into service in 2008 to be deducted in 2008. The remainder of the cost of the asset will be amortized over the remaining 38 years of the structure's life. The Senate is expected to consider HR 5140 early this week. Contrary to some media reports, we believe that the GSE and FHA loan limits will both be included in the Senate package. NAR is currently conducting a Call For Action to the Senate, asking for their support of these provisions. If you have not yet responded, please visit www.realtoractioncenter.com to contact your Senators.

FHA/Utah Housing

Currently at 5.5%/5.49%
1. easier credit qualifying
2. current max loan amount is $362,790 and FHA loan limit may increase to FNMA limit of $417,000
3. Gift for 3% down payment still acceptable
4. Property requirements are not as tight as they once were
5. 100-106% Utah Housing loans
6. Income limits $70,500 for a family of 3 and requires two scores above 620
7. Down Payment assistance still available (until April 2008)
8. Low monthly Mortgage Insurance- only 0.5%
9. Rates similar to Conventional

Any questions, please call me (Marina-your Real Estate consultant) at 801-649-5883

What Mortgage Programs are available now? (Part I)

1. There are still lender out there who lend their own money
2. 100% Financing is still available-with one loan and $500 contribution
3. 80/10/10 still available for Jumbo and Conventional
4. States Income/Stated Assest still available-10% down payment
5. Low FICO Lending still available (patience is required)
6. FHA/Utah Housing (currently 5.5%, in more details tomorrow)
7. Why Mortgage Insurance (MI) is good (in more details tomorrow)
8. no MI loans available up to 100% on conforming and 90% on Jumbo-I will try to show you that not only interest rate is important when you get estimates from broker
9. new Rehab loan for buyers
10. Interest Abatement