FHA Update

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FHA Update

• Florida Association of Mortgage Brokers
• June 10, 2009
• Anthony Britto
• Sr. Account Liaison
• FHA - Office of Business Development
• 305.520.5024
• anthony.f.britto_at_hud.gov

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Welcome to FHA

• An FHA-insured mortgage is a viable option for
  many buyers. A mortgage product tailored to the
  buyer's needs benefits everyone
• The homeowner can afford the payments
• The homeowner is happy and satisfied
• A happy homeowner refers family and friends to
  you, their real estate agent

1-800-Call FHA
FHA - Serving Homebuyers Since 1934
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FHA Overview

• FHA was established in 1934 and became a part of
  the U.S. Department of Housing and Urban
  Development in 1965
• FHA is the U.S. Governments largest insurer of
  loans - 4.7 million loans
• FHA offers mortgage insurance to protect lenders
  in event of borrower default
• The insurance protection allows lenders to
  originate mortgages to those who may not qualify
  under conventional guidelines

• FHA does not
• Originate, close, fund, or service loans
• Set the interest rate
• Determine fees and charges
• Have income limits

1-800-Call FHA
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What About FHA Loans?

• Let FHA Loans Help You Your Buyer
• Find an FHA-approved Lender- http//www.hud.gov/ll
  /code/llslcrit.cfm
• FHA Maximum Mortgage Limits- 423,750- ML 09-07
• FHA-approved Condominiums-https//entp.hud.gov/ida
  pp/html/condlook.cfm

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Advantages for Buyers

• Smaller Down Payment 3½
• Flexible Down Payment Sources
• No Maximum Income or Sales Price Limits
  (Subject to Maximum Loan Limits)
• Buyer doesnt need to have perfect credit
• No Prepayment Penalty
• Loss Mitigation options

1-800-Call FHA
FHA - Serving Homebuyers Since 1934
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FHA Benefits

• Fully Amortizing Loans Fixed ARM
• Automated and Manual Underwriting
• Traditional and non-traditional credit
• Down Payment can be Gifted or Borrowed
• 6 Max. Seller Paid Financing Contribution
  (C-Cs, Prepaids, Points, I/R Buydowns, UFMIP)
• Assumable loan credit qualifying after
  12/1/1986
• Ability to Streamline Refinance without Credit
  Qualifying
• Loss Mitigation options

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Borrower Characteristics

• Owner-Occupant only
• Co-borrowers (occupying and non-occupying)
• Co-signers
• Citizenship not required SSN is required
• No maximum age
• No income limits

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FHA Modernization Legislation

• Housing and Economic Recovery Act of 2008
• Changed Down Payment 3½ (Loan Amount is 96.5
  of SP or Appraised Value, whichever is less)
• Cannot finance Closing Costs
• Premium Pricing can be used to pay C-Cs and
  prepaids
• Eliminated Seller-funded Down Payment Assistance
• Moratorium on Implementation of Risk-Based
  Premiums
• New Upfront MIP 1.75
• Annual Prem. - gt15 yr - .5 LTV 95 .55 LTV
  gt95
• - 15 yr 0 LTV 90 .25
  LTV gt90

1-800-Call FHA
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Sample Calculation - Basic

• Sales Price 218,000 Appraised Value
  220,000
• Max. Mortgage 218,000 x 96.5 210,370
• Down Payment 218,000 210,370 7,630
• Upfront MIP 1.75 x 210,370 3681.48
• Total Loan Amount 210,370 3,681
  214,051
• Note The maximum mortgage shown does not
  consider any closing costs that must be paid by
  the borrower.

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Sample Calculation Inducement to Purchase

• Sales Price 218,000 Appraised
  Value 220,000
• Gift Card 3,000 Adjust. to SP 218,000
  - 3,0000
• Max. Mortgage 215,000 x 96.5 207,475
• Downpayment Calc. 218,000 - 207,475 - 10,525
• The gift card value provided by the seller
  must be subtracted from the Sales Price (SP).
  Sellers are still permitted to provide seller
  financing concessions up to 6 of the SP. Other
  inducements to purchase must be subtracted from
  the SP or Value when calculating the max.
  mortgage amount/downpayment.

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FHA Modernization Legislation

• Condominiums- Still in process
• Tax Credit- ML 09-15
• HECM for Purchase- ML 08-33
• HECM Maximum Loan Limit - 625,500
• HECM Counseling Requirements- ML 08-28
• Independence of HECM Mortgage Originators
• Prohibition against requirements to purchase
  additional products as a condition for HECM
  eligibility

1-800-Call FHA
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FHA Modernization Legislation

• Energy Efficient Mortgages
• Mfg. Housing (Title I) Raised Maximum Mortgage
  amounts to
• - 25,090 for Repair/improvements
• - 69,678 Unit
• - 92,904 Unit and Lot
• - 23,226 Lot only
• Indexed to adjust limits

1-800-Call FHA
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What This Means for You

• Larger Loan Amounts, Higher Sales Prices
• Client and Market Expansion
• More opportunities for the Industry
• More business for you!
• More Options for More Consumers
• More Sensible Mortgage Products
• Simplification of Lending Process

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FHA Programs

• Fixed Rate/ARMs
• Purchase
• Refinance
• Rehabilitation
• Standard
• Streamline

• HECM for Purchase (Reverse Mortgage)
• Energy Efficient Mortgage
• HUD Homes
• Good Neighbor Next Door

• Manufactured
• Housing-ML 09-16

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Rehabilitation Mortgages

• Standard
• Repairs/Improvements must be at least 5000
• Consultant required
• Architectural Exhibits required
• Borrower can make repairs/improvements if
  qualified

• Streamline
• Facilitate uncomplicated repairs/improvements
• No consultant required
• No architect required
• Borrower can make repairs/improvements if
  qualified
• Include up to 35,000

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HECM for Purchase

• Borrower seniors age 62 or better
• Reverse Mortgage counseling required
• Property 1-4 family dwellings, existing only
• OwnerOccupied only within 60 days from closing
• At closing, only the HECM 1st 2nd liens allowed
• FHAs Property Flipping prohibitions apply
• At closing, buyer must provide monetary
  investment equal to difference between HECM
  principal limit and sales price, plus HECM loan
  related fees not financed or offset by other
  allowable funding sources

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HECM for Purchase

• Appraised Value/Max. Claim Amt. 300,000
• Sales Price 300,000
• Principal Limit 199,500
• Minus Loan Fees (15,500)
• Avail. HECM proceeds 184,000
• Required cash investment 116,000
• AV/MCA is the MCA used to determine the
  principal limit which is the lesser of the
  appraised value or the FHA national mortgage
  limit. The principal limit is the max. amount
  available to the HECM mortgagor.
• Assumes the age of the youngest borrower is 67
  and a principal limit factor of .665 for a 5
  expected average interest rate.

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Energy Efficient Mortgage Program (EEM)

• Eligible for new or existing 1-4 family units
• Maximum Loan in Area Can Be Exceeded by the EEM
  Amount
• Eligible for use with Rehabilitation Mortgages
  (203K)
• Available for Condos and Manufactured Homes
• Cost of improvements that may be eligible for
  financing is either 5 of the propertys value
  (not to exceed 8,000) or 4,000, whichever is
  greater.

1-800-Call FHA
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Selling HUD Homes

• What are HUD Homes?
• Register to Sell HUD Homes
• Electronic Internet Bidding
• Current Listings
• Management Marketing Contractors (MM)

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What Are HUD Homes?

• HUD-owned houses are often referred to as HUD
  Homes. HUD Homes are houses that had an
  FHA-insured mortgage and the homeowner defaulted.
  The lender then deeded the home to the Secretary
  of HUD in exchange for an insurance claim
  payment.

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Its Easy to Sell HUD Homes

• Brokers can register with HUDs MM Contractor
  for Florida properties, NHMS, through their
  website, www.nhmsi.com
• Once completed, the broker can show, advertise,
  and submit offers on HUD Homes
• HUD pays the broker a commission of up to five
  (5) percent
• HUD-registered brokers and their agents are able
  to submit bids 24/7 over the Internet. Electronic
  bidding is the only method to submit bids for HUD
  Homes

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Management Marketing Contractors

• MM contractors manage and market single-family
  properties owned by, or in the custody of, the
  Department
• The geographic service areas covered by each of
  the MM contractors, their mailing addresses,
  telephone numbers, fax numbers, and internet
  addresses are provided on the HUD website

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Current Listings

• Listings of HUD Homes are available through
• www.hud.gov/homes
• MLS
• MM Internet sites
• www.homesales.gov

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Help for Your Buyer

• HUD Home Buying Guide
• Housing Counseling
• Increased FHA Mortgage Loan Limits
• Broward, Miami-Dade, Palm Beach
• 1 Unit - 423,750
• 2 Units - 542,450
• 3 Units - 655,700
• 4 Units - 814,900
• https//entp.hud.gov/idapp/html/hicostlook.cfm

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Helpful Resources fha.gov
1-800-Call FHA
FHA - Serving Homebuyers Since 1934
26
hud.gov
3
1-800-Call FHA
FHA - Serving Homebuyers Since 1934
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Contacting FHA

• Websites FHA Call Center
• www.fha.gov 800-Call FHA
• www.hud.gov Live Web Chat
• www.espanol.hud.gov TBA
• www.fhaoutreach.gov/fhafaq
• Locate a Housing Counselor
• 800-569-4287
• To Sign Up on FHAs List serve
• listserv_at_hudlist.hud.gov

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FHAs Commitment to Our Real Estate Partners

• FHAs goal is to provide Safe and Affordable
  Mortgage Products that Support Sustainable
  Homeownership
• FHA recognizes the Key Role the Real Estate
  Professional plays in the Mortgage Finance
  Industry
• Thank you for Your ATTENTION!!!