Mortgage Talking Points

Currentcy Staff Writer

FHA Higher Limits Just Announced

• Loan limits have reverted back to the 2008 “higher” loan limits
• If the loan limit in your area was higher for 2009 (versus 2008) you can use the higher of the loan limits
• Higher loan limit amounts for 203(b) (1-4 family & Condos), 203(k) and 203(h) (disaster victims) are retroactive HOWEVER, it’s for loans “credit approved” (key word here) between January 1 and December 31, 2009
• HECM - Increased the loan amount from $417,000 to $625,500.  The effective date for this increase is February 24, 2009 and does NOT have an expiration date

There is a little-known provision in the American Recovery & Reinvestment Act of 2009 that authorizes a PARTIAL TAX CREDIT if a first-time home buyers income EXCEEDS the adjusted gross income (AGI) limit of $75,000 for a single person and $150,000 for a married couple. 

Two important things you need to know:

            1. “Income” is defined as the Adjusted Gross Income “line” on 1040, 1040A and 1040EZ. Yes, it actually says those words within the line item.

            2. The “Partial Tax Credit Income Cap” is $20,000 — and by the way, that’s the dollar basis for the formula we’re about to share with you. 

Example:            Married Couple’s AGI is $159,000

                             Subtract Maximum AGI $150,000 For Married Couple = $9,000

                             Divide $9,000 by $20,000 = .45

                             Subtract .45 from 1.00 = .55

                             Multiply .55 x $8000 (max credit) = $4,400

Yes, $4,400 is the tax credit this couple can get–even when their income exceed the so-called maximum income amount.  Even at $19,000 over the AGI, this couple could still get a $400 tax credit!  Use the exact formula for a single home buyer! 

Be sure to check with a tax advisor but as a first-time home buyer, this is awesome incentive to buy a home by December 1, 2009. Mortgage Currentcy Staff Writers

Okay rodeo fans. Anybody else besides me freaking out about the announcement made yesterday by Flagstar? If you are a correspondent lender like me and have been studying the HVCC to devise proper company compliance procedures for ordering your appraisals this will have you beating your head against the wall. Here’s what they are saying:

• Effective for loans purchased after 2/27/09
• All 2-4 unit properties (conventional and government) must have appraisals done by one of their approved Appraisal Management Companies (AMC’s).

ARE YOU KIDDING ME!!!

HVCC allows correspondent lenders to order their own appraisal (within guidelines).

HVCC states that government loans are exempt.

Is this the sign of what’s to come? The investors have decided to lump us all together, brokers and correspondent lenders, and disregard the HVCC guidelines and write their own rules?

Also the revised HVCC allows them to have ownership in the AMC’s they make us use. So they are not only going to disregard that, as a correspondent lender, I have a huge financial stake in every file, hence my motivation to avoid fraud AND they may make money on the side doing it. GIVE ME A BREAK!

Just a warning for all of you lenders out there scrambling to create procedures and organize personnel to be ready for the May 1 deadline:

IT MAY BE A WASTE OF OUR TIME!

We’ll keep you posted. Tracey Rumsey

Big news here is investment property guidelines.  Fannie gave us more flexibility in the number of units that can be owned by real estate investors, but also increased the reserve requirements for all investment properties.  (Fannie Mae Announcement 09-02 dated Feb 6, 2009)

Credit scores need to be 720 or higher, but investors can now buy 10 investement properties using Fannie Mae conventional financing–and best of all, the first 4 properties only require 15% down payment.  Getting Mortgage Insurance coverage might be another issue entirely!

Reserve requirements have changed for second homes and investment properties.  Second Homes required 2 months PITIA and rental property is 6 months PITIA for EACH property.

Loan Officers - Huge opportunity for your investor clients.  Remember, it is aimed at well-qualified investors.  Watch the reserve requirements, as DU will not catch that for you. 

Mortgage Talking Points flyer contains all the info.    Notify your real estate agents!  Search your database for the “ideal” client who may be interested in adding a few pieces of real estate to their investment portfolios instead of stocks and bonds.

If you are a loan processor, all I can say is document, document, document.  Make sure you can prove what taxes and insurance are for the other properties (check tax returns).  You will need that to verify your reserves are sufficient.  Get tax returns upfront and make sure you are getting your 4506 quickly when necessary. 

 Make sure your staff is familiar with how to execute the 4506 and get it back so your closings are not delayed.  In addition, this is a great opportunity to get out there and spread the word to investors. 

Dan Moralez

MortgageCurrentcy.com Staff Writer