Entries tagged with “credit”.
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Wed 4 Aug 2010
Posted by karen under FHA
No Comments
There’s been a lot of conversation about changing the
structure of FHA loans–and we wanted to let you know
it hasn’t happened…yet!
Here’s a quick synopsis on HUD Press Release 10-150:
HUD Seeks Public Comment on Three Initiatives to Boost FHA Capital Reserves
HUD is accepting comment on the following policy changes:
1. 10% down payment requirement for new FHA borrowers with credit score below 580.
2. Seller concessions to be reduced from 6% to 3%.
3. Tighter UW standards for manual underwrites.
#2 is giving many of us heartburn as it will be the very audience HUD swears to serve, the affordable housing market, that will suffer the most with this change. We would love to see tiered system come out of this instead of a flat across-the-board 3%.
Here is the link to the actual notice in the Federal Register:
Speak now - or forever wish you had!
Make some noise!
Tags: changes, comments, congress, credit, down, FHA, HUD, payment, policy, score, tighter, underwriting
Tue 1 Jun 2010
Posted by karen under Compliance
No Comments
June 1 is when Fannie/Freddie will require that you check to make sure that your clients have not incurred any new debts…or if they have a lower credit score, what is the reason is for the lower score. I found that Informative Research just launced a service called “PreCloseCredit” which offers a comparison and a summary of any changes from the initial credit report. Might want to check it out (no, i don’t have any affiliation with them) just thought it might help you out. http://www.informativeresearch.com/
Tags: credit, debts, Fannie, Freddie, informative, Links, LQI, pre close, report, research, scores
Tue 11 May 2010
Posted by karen under Fannie Mae
No Comments
Fannie never had an official policy about how they would treat people who had a short sale or a deed-in-lieu of foreclosure in their past. Well, SEL 2010-05 spells it out for you. Basically, they have 3 waiting options and 3 down payment options. 1. 2 year waiting time and 20% down; 2. 4 year wait and 10% down; 3. 7 year waiting time and 5% down. Effective 7-1-10.
Extenuting Circumstance Rule (for those who has a pre-foreclosure): Job loss, divorce, decrease in income, increase in debts - 2-years and 10%,
Let’s talk about re-establishing credit after a short sale or deed-in-lieu. In addition to these below, the minimum credit scores must be met (varies between lenders)
1. Waiting period is defined as from the date of the short-sale/deed, to the date of application
2. Must receive automated underwriting approval
3. Establish “traditional” credit thru banks, finance and credit cards
Real Estate Agents should let their clients (who have or are selling home with short-sale) of the waiting time periods too.
Tags: credit, deed-in-lieu, down payment, Fannie, foreclosures, period, pre-foreclosure, reestablish, sale, SEL 2010-05, short, waiting
Wed 20 Jan 2010
Posted by admin under FHA
[2] Comments
Here’s the entire HUD announcement that appears on their website. No implementation date yet–but looks like late spring/early summer.
So what do you do now?
Get those home buyers OFF THE FENCE–
it’s simply going to cost them more money if they don’t act now!
Here’s the condensed version:
1. UFMIP will be increased form 1.75% to 2.25%. The change to occur in spring 2010.
2. Update the combination of FICO scores and LTV maximum:
o FICO’s less than 580 will see down payment requirements increase to 10%
o This change will be announced in the Federal Register for comment
3. Seller contributions will be reduced from 6% to 3% to conform to the conventional market.
4. Increase audits on FHA lenders
————————————————————————————————————————————————————-
Here’s The Entire HUD Press Release
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016
HUD No.10-016
Melanie Roussell
(202) 708-0980
|
FOR RELEASE
Wednesday
January 20, 2010 |
FHA Announces Policy Changes to Address Risk and Strengthen Finances
New Measures Will Help FHA Better Manage Risk, While Maintaining Support for the Housing Market and Access for Underserved Communities
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:
- 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.
- 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.
- 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
- 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.
- 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%.
- 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.
- 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.
- 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.
- Increase enforcement on FHA lenders
- Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.
- This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
- Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
- Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
- This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
- Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
- Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
- HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
- Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
- Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches
In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.
Tags: concessions, credit, down, FHA, HUD, increases, low credit score, monthly MIP, payment, risk, score, seller, UFMIP
Mon 14 Dec 2009
Posted by admin under Uncategorized
1 Comment
Now that the banks have sucked the money out of our economy and then our government they are hell bent on holding on to it. It’s no secret in the mortgage business that lenders are doing everything they can NOT to lend.
I’m not talking about making risky loans. I’m talking about preventing qualified, responsible people from buying a home. Even when loan applications meet every federal lending guideline the wholesale lenders apply restrictive “credit overlays” to deny mortgage loan applications. Furthermore, it appears that experienced underwriting specialists have been replaced with less costly processors who have no concept of analyzing risk. The cost cutting has also left lenders understaffed and inefficient.
Another tool conspicuously disguised as consumer protection is the new Home Value Code of Conduct. By prohibiting loan originators from ordering appraisals from qualified and licensed local appraisers the banks have found a way to undervalue properties using Appraisal Management Companies (AMC) in which they share ownership. Not only do consumers get overcharged for each appraisal, they also get charged for multiple appraisals whenever the application has to be transferred to another lender even when the same AMC does the additional appraisals. This is the biggest scam ever perpetuated on consumer borrowing
As if that wasn’t enough here’s another assault on local mortgage companies and consumers, once again, in the name of consumer protection. Wholesale lenders have capped fees to originators (makes sense) BUT the maximum fees include all the lenders junk fees and the rules do not apply to lenders who are permitted by law not to disclose what they are earning on a loan. In other words, if you can conceal your fees from the borrower the maximum fee limits do not apply
The bottom line is that no one seems to care that at the other end of all these injustices is an American family trying to own a new home. In the big picture it means jobs for the real estate, construction, insurance. home improvement, and all other related businesses. None of this happens if the banks don’t do what they are responsible for doing: lending.
-Danny
Daniel J. Poulos
561.575.5626
www.EliteLending.biz
www.RealEstateRoadkill.com
Thu 3 Dec 2009
Like most government legislation, the Nov 6, 2009 homebuyer tax credit extension created more questions than answers. However, according to Doug Geissler, CPA, the IRS is literally writing the “refund rules” as they go along.
Unbeknown to homebuyers, real estate agents and the mortgage industry, the IRS is giving behind-the-scenes instructions—that are not available to the general public—to CPA’s and tax advisors on how to file for the home buyer tax credit after Nov 6, 2009. It will be completely different than what you might have advised your clients previously—and your clients are NOT going to like these changes!
The first shocker? Your clients cannot file a 1040 EZ to claim the tax credit! Nor can they file tax returns electronically if claiming the tax credit!
Read exactly what and how the MAGI is figured; how the forms need to be filed; what docs need to accompany the tax return and the estimated time the IRS is projecting for the tax credit refund!
In addition, links to the most recent IRS Updates and FAQ’s provided.
Why no electronic filing or 1040 EZ forms?
It’s the first step in stopping fraudulent tax credit refunds. Believe it or not, the IRS never had a way to determine if a person owned a home—no auditing software in place–to determine if they previously claimed a “mortgage interest” deduction within a 3-year time period. The IRS is building “auditing software” now to “catch” previous homeowners who are trying to claim a FTHB tax credit.
Secondly, the IRS now requires that the HUD 1 or closing statement be attached to the 5405 form (and that cannot be attached electronically).
Third, speaking about the 5405 form…unless the home was purchased on or before November 6, 2009, currently there is NO FORM on the IRS website to file the amended return. Here’s the wording that you will find when you to the IRS website and try to download the form:
Changes have been made to the first-time homebuyer credit by Public Law
111-92, the Worker, Homeownership, and Business Assistance Act of 2009,
which was enacted on November 6, 2009. As a result, the 2008 Form 5405
can be used only for homes purchased before November 7, 2009, for which
an election is made to claim the credit for 2008. We will soon issue a
December 2009 revision of Form 5405. The December 2009 revision will be
for use for all homes purchased after November 6, 2009 (whether the credit
is claimed for 2008 or for 2009) and for all claims on 2009 returns for
homes purchased any time in 2009.
And to give them time to audit the document, the IRS is telling tax advisors to expect an average of a 16-week turn around time…which means that it could either be the refund OR a request for additional documentation. Geissler says that one of his clients recently received an IRS notice, requesting a letter from a landlord, a copy of a driver’s license and the closing statement on an amended tax return where the client was claiming the FTHB tax credit. Yes, the new law allows them to ask for additional info on amended returns.
So, what means, that if your clients is expecting an income tax refund AND a homebuyer tax credit refund, BOTH refunds could be held up for several months.
We all know what adjusted gross income is, right? But did you know that there are over 20 different “modified adjusted gross income” interpretations for different tax forms and credit tax claims?
In regard to the homebuyer tax credit, the simple explanation is that is Line 38 on the 1040 form (remember, no 1040EZ to claim this tax credit). However, if IRS Form 2555 (Foreign Earned Income) or IRS Form 4563 (Exclusion of Income fro Bona Fide Resident of American Samoa) is attached, this income has to be ADDED to line 38 to determine if the clients meet the maximum income limits of $125,000 or $225,000. While this might not apply to very many clients, it’s something you can counsel your client about if they claim foreign income to qualify for a loan.
Here are the links to the most recent updates regarding the Nov 6, 2009 homebuyer tax credit extension.
10 Important Facts About the Extended First-Time Buyer Tax Credit - 11-30-09
http://www.irs.gov/newsroom/article/0,,id=215827,00.html?portlet=7
First-Time Homebuyer Tax Credit - 11-24-09
http://www.irs.gov/newsroom/article/0,,id=204671,00.html
Tags: 1040, 5405, cpa, credit, extension, ez, Form, homebuyer, known, little, tax
Wed 14 Oct 2009
Posted by Tracey Rumsey under Uncategorized
No Comments
This Just Out - The House voted (10-13-09) to extend the $8,000 tax credit to MILITARY, Foreign Service & Intelligence Officers until 11-30-10. They have to qualify using the same 1st time buyer rules and they have to have had 90 days of continuous military service during 2009. One new provision: If the military person is forced to sell their home (within the 3 year period) due to military orders or deployment - they will not have to pay back the $8,000. It’s expected to sail thru the Senate shortly.
Wow….I guess that’s one way to save face. Instead of saying “We don’t have the money to fund this” they cut their losses by extending it to a small section of the population, but one nobody will pick on. Don’t get me wrong. I’m all about the military and veterans absolutely deserve special benefits for their service, but the truth is, they can’t afford it but don’t want the political backlash that will come with not extending it at all.
Tags: $8000, 2010, buyer, credit, extended, home, house bill, military, November 2, senate, tax
Fri 20 Feb 2009
Posted by Tracey Rumsey under Uncategorized
No Comments
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
