FHA eases rules for borrowers after bankruptcy, foreclosure

The Federal Housing Administration wants to make it easier for people who have defaulted on their mortgages to get a new home loan with FHA backing.

But there's a catch, to qualify borrowers must show that their foreclosure or bankruptcy was caused by external economic factors, reducing their income by 20% or more for six months. You can't have quit your job or have been fired for cause.

If you can demonstrate such a pay cut, job loss or decline in business income now must spend only one year making timely rent and credit-card payments before they can apply to buy a home with an FHA-insured loan.

Generally borrowers are not eligible for a new FHA loan until three years after a foreclosure or two years after a bankruptcy. Previously, the death of a spouse or a medical emergency had been exceptions that could cut the wait to a year; now loss of income is listed as an extenuating circumstance as well.

Loan Modification Update

New Modification Program

The Federal Housing Finance Agency will require mortgage servicers to offer a streamlined modification program to borrowers with loans owned or guaranteed by Fannie Mae and Freddie Mac, starting in July. The offers will be sent to homeowners who are at least 90 days behind on their loans but no more than two years behind. To qualify, borrowers must owe at least 80 percent of the home's value.

The modification reduces the loan's interest rate and extends the loan term to 40 years.
Minimal paperwork:  Borrowers won't be required to submit any financial documentation to the lender to get approval. The loan modification becomes permanent after three payments are made during the three-month trial period.


Ginnie Mae Loans

Your just screwed- no mod for you!



Borrowers seeking low-payment mortgages will be charged for mortgage insurance for the life of their loans if they don't get their Federal Housing Administration mortgages by June 2.

The FHA currently requires borrowers to pay for mortgage insurance on FHA loans until the balance reaches 78 percent of the original value of the home.

Pay forever:  Once the change goes into effect, all new FHA loans with less than a 10 percent down payment will carry mortgage insurance until the loan is refinanced or paid off. Loans with a 10 percent down payment or greater will have to pay for mortgage insurance for at least 11 years.
For borrowers who plan to stay in their homes for less than 10 years, the new rules won't make that much of a difference, says Cameron Findlay, chief economist at Discover Home Loans. That's because normally, it takes borrowers about 10 years to reach the required loan level for the insurance to cancel anyway.

Mortgage Rates

The Mortgage Bankers Association estimates the 30-year fixed rate will reach 3.9 percent by the end of the first quarter this year. That's not as good as the superlow rates that borrowers got in December 2012, when the 30-year fixed hit a record low of 3.5 percent in Bankrate's weekly survey

In the News

Virginia Ruling Holds that Mortgage Lenders Must Hold Face-to-Face Meetings Before Foreclosure in FHA/HUD Loans

http://dc.citybizlist.com/5/2012/6/7/Virginia-Ruling-Holds-that-Mortgage-Lenders-Must-Hold-FacetoFace-Meetings-Before-Foreclosure-in-FHAHUD-Loans.aspx

HUD Regulation 4155.1 4.C.2.f, which governs FHA mortgages, addresses this common scenario. This regulation states that the contingent liability of the ex-spouse for the future payments due on the mortgage on the home now owned by the other spouse is not be counted if the loan was foreclosed. The regulation reads as follows:
A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years his/her previous principal residence or other real property was foreclosed, or he/she gave a deed-in-lieu of foreclosure.
Exception: The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.

Recent changes to the HARP Program removed the maximum percentage amount that a property can have an underwater mortgage. Prior to December 1, 2011, the maximum amount that a property could be underwater was 125% of the loan balance.

This means that if a property is valued at $100,000, the maximum that the mortgage being refinanced would be $125,000 or 125% of $100,000. This would also be referred to as 125% LTV or loan-to-value.

HarpMortgageLender.com is a comprehensive online resource for underwater homeowners who are looking for non-biased information about their options to stay and refinance or consider a short sale.

Read more: http://www.timesunion.com/business/press-releases/article/HARP-Mortgage-Lender-Helps-Prevent-A-Massive-Wave-3612766.php#ixzz1xhHPEPrd

foreclosure rescue scams overview

http://www.news-sentinel.com/apps/pbcs.dll/article?AID=/20120606/BUSINESS/120609756/0/SEARCH

The Mortgage Forgiveness Debt Relief Act generally exempts you from being taxed on up to $2 million of mortgage forgiveness on your primary residence through the end of 2012 as long as its due to a decline in the value of your or your financial situation. That means you’ll want to avoid turning it into a vacation or rental property first or waiting until after the act is scheduled to expire at the end of the year.

FHA Commissioner David Stevens to Take the Reins at MBA

The Mortgage Bankers Association (MBA) announced Tuesday that John A. Courson, the organization's president and CEO, will be leaving the association, effective June 1, 2011. Courson will be replaced by David H. Stevens, the current commissioner of the Federal Housing Administration (FHA). Stevens announced last week that he would be resigning from his position at FHA. His departure from the federal agency is set for March 31. According to MBA, he will join the trade group in May.

FHA Powers

As one of the few backers of low-down-payment mortgages in a time of stringent lender underwriting, the Federal Housing Administration has become a primary means of financing for U.S. home buyers, the Wall Street Journal reported today. However, as the government moves to reform the mortgage market, the FHA is heading for some changes that could limit borrowers' access to the loans or make them more expensive. About 56 percent of mortgages for a home purchase were FHA-insured in 2009, up from 6 percent in 2007, according to a report from the George Washington University School of Business. Many FHA borrowers are first-time buyers drawn by a down-payment requirement of just 3.5 percent of a home's purchase price

http://online.wsj.com/article/SB10001424052748703867704576183003307736130.html?mod=WSJ_hps_sections_realestate#printMode

Operation Watchdog Entangles 15 FHA Lenders

Fifteen direct-endorsement lenders that failed to underwrite loans to Federal Housing Administration (FHA) standards could face more than $23 million in civil enforcement actions following a recommendation by the U.S. [read more]

http://www.mortgageorb.com/e107_plugins/content/content.php?content.7974
 
http://www.hud.gov/offices/oig/reports/files/ig11cf1801.pdf
 
The 15 lenders at the heart of Operation Watchdog included the following:




Lombard, Ill.-based 1st Advantage Mortgage;

West Bloomfield, Mich.-based Birmingham Bancorp Mortgage Corp.;

Flint, Mich.-based Mac-Clair Mortgage Corp.;

Southlake, Texas-based Alacrity Lending Co.;

Millersville, Md.-based Dell Franklin Financial;

Farmington Hills, Mich.-based D&R Mortgage Corp.;

Englewood, Colo.-based Assurity Financial Services LLC;

Arlington, Texas-based Americare Investment Group;

Sugar Creek, Mo.-based American Sterling Bank;

Cheshire, Conn.-based Webster Bank;

Lakeway, Texas-based Alethes LLC;

Edison, N.J.-based Security Atlantic Mortgage Co. Inc.;

Memphis, Tenn.-based First Tennessee Bank NA;

Atlanta-based Pine State Mortgage Corp.; and

Great Neck, N.Y.-based Sterling National Mortgage Co. Inc

FHA EXTENDS 'ANTI-FLIPPING WAIVER' TO SPEED SALES OF REO HOMES

The Federal Housing Administration (FHA) announced Friday that it is extending the suspension of its 'anti-flipping rule' through the remainder of 2011. FHA Commissioner David Stevens says the temporary waiver will accelerate the resale of foreclosed homes in neighborhoods that are overrun with abandoned properties and blight. The move is intended to help stabilize home values and improve conditions in communities experiencing high foreclosure activity.


http://www.dsnews.com/articles/fha-extends-anti-flipping-waiver-to-speed-sales-of-reo-homes-2011-01-28

Unemployed Home Owners Plan Update

The Obama administration plans to take two new steps in the next few weeks to help struggling homeowners pay their mortgages, said Shaun Donovan, the secretary of Housing and Urban Development, Bloomberg News reported today. The administration will begin a Federal Housing Administration refinancing effort to help borrowers who are struggling to pay their home mortgages, and will start an emergency homeowners' loan program for unemployed borrowers so they can stay in their homes, Donovan said. He said that it was too soon to say whether the administration's $8,000 tax credit for first-time home buyers, which expired April 30, would be revived.


Florida has one of the highest home foreclosure rates in the country, with one in every 171 Florida housing units receiving a foreclosure filing this year.

http://www.nytimes.com/2010/08/30/business/30hud.html

FHA - Principal Reducing Refis for Underwater Borrowers

Starting September 7, the federal agency will offer new FHA-insured mortgages to certain underwater, non-FHA borrowers who are current on their mortgage payments and whose lenders agree to write off at least 10 percent of the unpaid principal balance.


This last part could prove to be the caveat that leads the new FHA refi program down the same road as the federal government’s other housing programs – a road of below par results and public criticism.

Lenders are fantastically reluctant to write down mortgage principals. It would mean either they or their mortgage investors would have to eat the amount of debt that’s forgiven, and it could set a precedent that a loan contract is not a contract at all if the terms spelled out in black and white can be changed based on market nuances, such as a slump in real estate values.

To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth, be current on their existing mortgage, and occupy the property as their primary residence. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal of at least 500.

Participation in the program is voluntary and requires the consent of all lien holders. The borrower’s existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance to bring the borrower’s combined loan-to-value ratio to no more than 115 percent.

In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent.

Servicers planning to take part in the new program must execute a Servicer Participation Agreement (SPA) with Fannie Mae by October 3, 2010.

FHA's Insurance Premium Changes to Take Effect in October

The Federal Housing Administration (FHA) has decided to delay the planned adjustments to its insurance premium structure by one month, after the industry expressed concerns about being ready in time. The premium fee changes will become effective October 4, 2010. Lawmakers gave the federal mortgage insurer enough leeway to increase the annual fee it charges borrowers three-fold, up to 1.55 percent. But the annual premium is not going to go that high. It will increase from 0.55 percent to between 0.85 percent and 0.90 percent of the loan amount.