Mortgage News!

I wanted to give a “Heads up” on a big change to FHA loans.

Effective with Case Numbers on September 7th forward, FHA loans will cost more per month. As a reminder a case number is ordered by the Lender when we have a contract and a borrower, so this does not mean loan has to close by September 7th, we just have to start the process by then.

This is kind of a bummer, but it is not the end of the world and in fact is a GREAT opportunity to get any FHA buyers off the fence over the next 30 days!

The change will be twofold: One, the upfront fee that gets rolled back into loan will only be 1%, instead of 2.25% (that is a good thing). Two, the amount a borrower pays each month will now be 90 basis points where as now it is 55 basis points (and this is the part that increases monthly payment (and this is the bummer part).

FHA is doing this to boost the insurance fund and keep the program going, so as whole better to have FHA that costs a little more, than no FHA.

Let me put this into perspective. On a $200,000 sales price, payment would go up about $44 a month, about $33 month on $150,000 and about $55 a month on $250,000

This is equivalent to about 3/8 in rate, so yes 3/8 in rate makes a difference, but it is not a deal killer.

The above is for 30 year loans, with the 3.50% down, which is the majority of FHA loans.

Fannie Mae Changes Rules for Borrowers with a Prior Short Sale or Deed-in-Lieu of Foreclosure

On April 14, 2010, Fannie Mae released Announcement SEL-2010-05 revising its rules regarding the eligibility of a borrower to obtain a new mortgage after a preforeclosure event (a short sale (also known as a preforeclosure sale) or a deed-in-lieu of foreclosure).For a consumer with a prior short sale or a deed-in-lieu of foreclosure without an extenuating circumstance, the new waiting periods are 2 years with a 80% maximum LTV, 4 years with a 90% maximum LTV, and 7 years otherwise. Read the Announcement.