My Blog

Government Refinance Program Gets One-Year Extension

This is an excellent program for someone that has lost value in their home and currently do not pay PMI.  They can refinance at today's lower rates with a higher LTV and not have to pay PMI. 

Monday, March 1st, 2010

Federal Housing Finance Agency (FHFA) acting director Ed DeMarco today announced the extension of the Home Affordable Refinance Program (HARP), for an extra 12 months, until June 30, 2011.

HARP, administered by Fannie Mae and Freddie Mac is the refinance branch of the administration’s Making Home Affordable Program announced last February. It was designed to permit refinancing for an estimated 4-5m people whose loans are owned or guaranteed by the GSEs. Fannie Mae and Freddie Mac purchased or guaranteed more than 4m refinanced mortgages in 2009, according to the FHFA.

The HARP program expands access to refinancing for qualified individuals and families whose homes have lost value, FHFA said. The program was set to expire on June 10 of this year.

Gov. Jay Nixon and State Treasurer Clint Zweifel today joined skilled craftsmen in St. Louis and Kansas City to kick off the Home Ownership Purchase Enhancement (HOPE) Program, a $15 million initiative designed to jumpstart the state's housing-construction industry.

Under the HOPE program, the Missouri Housing Development Commission will provide incentives of up to $1,750 to encourage Missourians to purchase homes.  The incentive will equal the cost of the homebuyer's first year's property taxes, up to $1,250. 

In addition, Missourians also would be eligible for an enhanced incentive if they purchase an energy-efficient home, purchase and remodel an existing home, or purchase an item, such as an Energy Star appliance, to make the home more energy efficient.  If the homebuyer's estimated property tax would be $1,250, the energy efficiency enhancement would be $500.  If the homebuyer's property tax would be less than $1,250, the individual would be eligible for a larger energy-efficiency incentive, up to a total incentive of $1,750.

You can view the applications at www.mo.gov and click on the homebuyer incentive tab.

Who is eligible?

Income eligibility is based on previously adopted MHDC guidelines. Depending on the county of the home sale, household income limit guidelines for low to moderate income persons or families approved by MHDC last spring range from $58,300 to $98,560. These grants are for owner-occupied purchases only.

When would it start?

Missourians are eligible for the HOPE incentive for purchase contracts made on or after Jan. 1, 2010.  Funds are available on a first-come, first-served basis until the total pool of $15 million is exhausted.

Where is the funding for this program coming from?

The funding comes from a reserve fund held by MHDC earned through successful management of mortgage loans made to low- and medium-income individuals and families. These reserve funds are not from general revenue, nor subject to the legislature's appropriation process.

How much of the property tax bill could be paid?

Eligible homeowners could have up to $1,750 of their property tax bills paid. According to the State Tax Commission, the average residential real estate tax bill for a Missouri homeowner is $1,160. An income-qualified individual or family is eligible to receive $1,250 or the amount of their first year's real estate tax bill, whichever is highest, when they purchase a new or existing residential home. An income-qualified individual or family can enhance this base amount, up to $1,750, if they purchase an energy-efficient new home or make energy efficient improvements to an existing home that is purchased. These improvements must be made prior to closing or within 60 days of closing. 

How do Missourians apply for these funds?

Forms and affidavits will be part of documents executed at the home sale closing.  Additional receipts and documentation will be required for proof of energy efficient improvements.  The MHDC forms have been finalized and are now available online by visiting the state's Web site, www.mo.gov, and clicking on the homebuyer incentive tab.

What energy-efficiency upgrades are eligible for the additional incentive?

Eligible improvements include installing high-performance windows, house wraps, programmable thermostat controls, water-efficient toilets and faucets, and energy-efficient water heaters, lighting and appliances; sealing heating and air conditioning ductwork; caulking; insulating water heater pipes; increasing the R-value of insulation in crawl spaces and attics; and conducting on-site energy efficiency inspections and tests, including a blower door test, which tests the overall energy efficiency of the house, and a duct blaster test, which tests how much the air ductwork leaks.

FHA Announces Policy Changes to Address Risk and Strengthen Finances

New Measures Will Help FHA Better Manage Risk,

While Costing New Home Buyers More.

WASHINGTON – Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.

The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement. U.S. Housing and Urban Development Secretary Shaun Donovan previewed the changes in December of last year, noting that the FHA would announce additional details before the end of January.

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”

Announced FHA Policy Changes:

1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
• The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge. This is a $500 increase per $100,000 per loan amount. Whereas it used to cost $1,750 in UFMIP, now will cost the new home buyer $2,250.
• If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP. Depending on how high this goes it may kick some borrowers out from qualifying.
• This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing. They must get approval before this can happen.
• The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring. Buy your new home in the next 30-60 days if you are look at using an FHA loan for financing as it is about to get more expensive.
2. Update the combination of FICO scores and down payments for new borrowers.
• New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. Although FHA is still at 580, most lenders are at 620 and several have made the recent move to 640.
• This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
• This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3. Reduce allowable seller concessions from 6% to 3%
• The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions. USDA still allows 6% and Conforming allows it as well if the borrower is putting down 5% or more. This will basically eliminate sellers paying for borrowers pre-paid items (initial annual homeowners insurance payment, taxes and escrow account)
• This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

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 ad enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov

90-Day Seasoning Waiver Expanded

This update from FHA was released on Friday January 15th, 2010, as an excerpt from the CFR (Code of Federal Regulations) without a corresponding Mortgagee Letter and contains information about FHA's policies regarding the waiver of the 90-day seasoning required for sellers.

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

1. Waiver takes effect February 1st, 2010 for a period of one year unless extended.
2. Investors are now exempt from the 90-day seasoning rule.
3. All transactions must me arms-length.
4. No identity of interest can exist between buyer and seller.
5. If sale price is 20% or more of the seller's acquisition cost, the lender must:
   a. provide supporting documentation and/or a second appraisal and
   b. order an inspection of the property and provide it to the buyer.
6. The waiver is limited to forward mortgages only.

To read the text of this waiver and specific details: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

You Can Refinance Up to 125% of Your Home's Value

Even if you owe up to 125% more on your mortgage than your home is worth, you may be able to refinance. For example, if your home is worth $200,000 but you owe more than that, qualifying homeowners can now refinance up to $250,000. 

According to First American Core Logic, more than 15.2 million homes had negative equity in June 2009. This represents nearly 33% of all mortgaged properties across the country. Where in the past, being upside down on your loan would have precluded your ability to seek relief, you now may have an opportunity.

The Making Home Affordable program was initially structured to accommodate homeowners with a new loan to 105% of their home's value. However, that amount has been increased to 125%. There are requirements to qualify including whether your loan is currently owned by either Fannie Mae or Freddie Mac. You can find out if your loan is held by either agency by visiting http://makinghomeaffordable.gov/loan_lookup.html.