1. FHA Programs: Session 3
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2. FHA TODAY
U.S. Department of Housing And
Urban Development
November 2010
Company
LOGO

3. Today’s Agenda
 Previous changes affecting industry partners
 HERA changes affecting industry partners
 Reverse mortgage program
 Manufactured housing
 Disaster relief
 Hope for Homeowners

4. Closing Costs
Mortgagee Letter 2006-04;-07
Eliminated non-allowable closing
cost fee schedule
Borrowers may pay anything that is
reasonable and customary with any
real estate transaction
 One Exception
Tax Service
 Normally $69 to $79

5. Appraisal Protocol
Mortgagee Letter 2005 – 48
 Adoption of FNMA forms
 Done “subject to” or “as is”
 May be appraised without review of
plans and specs if =/> 90% complete
 Eliminated
VC (Valuation and Condition) Sheets
Homebuyer Summary eliminated

6. Appraisal Protocol - Continued
 Inspections no longer  Items no longer required
mandated but may still to be repaired:
be required:  Missing handrails
 Pest Inspection  Cracked window glass
 Well Cert  Minor plumbing leaks
 Septic Cert  Poor workmanship
 Flat and/or  Defective floor
unobservable roof coverings

7. Housing and Economic
Recovery Act of 2008 - HERA
Key FHA Provisions
 Permanently increases loan limits
 Effective January 1, 2009
 Maximum county limit will be $625,500
 Lowest county limit will be $271,050
 Limits vary by county (MSA)
 Fannie Mae, Freddie Mac, and FHA may all have
same limits (subject to change)
 Home Equity Conversion Mortgage limit $417,000

8. Housing and Economic
Recovery Act of 2008
Key FHA Provisions
 Revised downpayment and maximum
mortgage calculation
 Effective January 1, 2009
 Bans Seller-Assisted Downpayment
Assistance Programs
 Effective October 1, 2008

9. American Recovery and
Reinvestment Act of 2009
Temporary Mortgage Limit Increase – Mortgagee
Letter 2009 – 07
 Temporary increase in ceiling/limit
 175% of GSE ($417,000 x 1.75%)
 $729,750
 Determined by county MSA’s
 Possibly higher in Alaska, Hawaii, Guam, and U.S. Virgin
Islands
 Home Equity Conversion Mortgage nationwide limit
 $625,500
 Expires December 31, 2010 (reverts to HERA limits)
 Loan must be fully approved by 12/31/10

10. Housing and Economic
Recovery Act of 2008
Minimum Required Investment - Purchase
 Effective January 1, 2009
 Minimum cash investment
 3.5% of appraised value or sales price
(whichever is less)
 Secretary of HUD has authority to amend
 Can set higher, but not lower required borrower
investment

11. Revised Downpayment and
Maximum Mortgage Requirements
Mortgagee Letter 2008 – 23 September 2008
 Maximum loan-to-value (LTV) simplified
 96.5% on purchase
 Maximum LTV not to exceed 100 percent of
appraised value or sales price (whichever is less)
 Including Upfront Mortgage Insurance Premium
Example:
96.5% loan-to-value + 1% Up Front Mortgage
Insurance Premium = 97.5% (okay)

12. Home Equity Conversion Mortgage
Programs (a.k.a. HECM)
 Known in the industry as a reverse mortgage
 Two programs
 HECM Standard
 HECM Saver (announced September 2010)
 Lowers up front cost for borrowers/buyers that want to
borrow smaller amount than would be available under
HECM Standard
 Availability of program features same for both
http://www.hud.gov/offices/hsg/sfh/hecm/hecmhomelenders.cfm

13. HUD’s Web-Site for HECM

14. Differences Between Programs
HECM Standard HECM Saver
 Higher principal limit  Lower principal limit
factor factor
 Initial Mortgage  Initial Mortgage
Insurance Premium – Insurance Premium -
2% .01%
 Annual Mortgage  Annual Mortgage
Insurance Premium – Insurance Premium –
1.25% 1.25%

15. Home Equity Conversion
Mortgage Programs – Cont.
Purchase, refinance, or cash out
Borrower brings in difference between
purchase price and maximum claim
Unlocks and converts equity to cash
Age of borrower, value of property, and
interest rate determine funds available
to the customer

16. HECM - Continued
Youngest borrower =/> 62
No credit qualifying
No income requirements
No monthly re-payments
Borrower must occupy property
majority of year (183 days)
Five (5) payment options

17. HECM Payment Options = 5
$ Line of Credit = money when needed
$ Similar to bank withdraw
$ Tenure = Fixed monthly payment
$ Term = Fixed payment defined in years or
months
$ Modified Tenure = Line of credit & fixed
monthly payment
$ Modified Term = Line of credit & fixed
monthly payment for months/years
NOTE: Payment option may be changed at
any time for a max. $20.00 service fee

18. Manufactured Housing
 Must have HUD I.D. Tag(s)
 Must have been manufactured on or after
June 15, 1976
 Must be affixed to permanent foundation
– Per FHA guidelines
 Can only have been moved from factory
to subject home site once; or factory to
dealership lot to home site once
 Cannot be moved from one home site to
another home site

19. Manufactured Homes - Continued
 Must be taxed as real property
 Must have engineer’s certification
that permanent foundation meets
FHA guidelines
 Can purchase land and home with
one loan
 If borrower already owns land, may
be used for minimum required
investment

20. Disaster Relief – 203(h)
Available to homeowners and renters
100% financing
3.5% minimum investment not
required
Must pay closing costs and pre-paids
New home can be anywhere in the U.S.
Must apply within one (1) year
When President declared disaster area
Must document residence and condition

21. Hope for Homeowners (H4H)
 Temporary program approved by Congress
 Expires December 2010
 Refinance from non-FHA insured mortgage to FHA
 Current or in default on existing mortgage
 Have not intentionally defaulted on mortgage
 Have made minimum of 6 full payments during life
of existing senior mortgage
 Must reside in property

22. H4H Eligibility - Continued
 Mortgage must have originated on or before
1/1/2008
 Must be borrower’s primary residence
 May not have any other ownership interest in
any other property
 Non-occupant co-borrowers will need to quit claim
interest prior to occupants applying for mortgage
 1 – 4 unit properties eligible
 Maximum mortgage amount $550,440

23. Where to Get More Information
 1 – 800 – CALL – FHA (1 – 800 – 225 – 5342)
 A source for all FHA questions
 Industry partners and Consumers
 www.hud.gov
 On-line resource for info about FHA and FHA
programs
 On-line source for all other HUD programs, grants,
forms, press releases, etc.
 User friendly
 www.fhaoutreach.gov/FHAFAQ
 On-line resource to frequently asked questions

24. www.hud.gov

25. www.hud.gov

26. www.fhaoutreach.gov/FHAFAQ

27. Agenda For Webinar Dec. 14th
 FHA Rehabilitation Loan Programs (203k’s)
 Regular Rehabilitation Loan
 203(k)
 Streamline Rehabilitation Loan
 Streamlined 203(k)
 Energy Efficient Mortgage
 EEM
 Other Repairs
 Solar and Weatherization Programs

28. The U.S. Department of Housing and Urban
Development
would like to thank the
California Association of Mortgage Professionals
And
Oregon Association of Mortgage Professionals
for your interest in
FHA and FHA programs