Great News for FHA buyers/Flippers/Realtors

[phlgirl]

FHA buyers will now be able to use the $8,000 tax credit towards downpayment/closing costs.

If you are trying to move properties, it might be wise to have a chat with your bankers/loan officers, so you can best advise your potential buyers on how to take advantage of this tool. We will certainly be having that conversation on Monday!


HUD $8,000 first-time home buyer tax credit available now - May. 29, 2009

 

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[hatterasguy]

Good, now lets get rid of the 90 day seasoning rule, it's rather annoying.

 

[hakrjak]

Awesome!!! And ditto to the above.

Also bring back seller funded down payment assistance.

Cheers,

- Hakrjak

 

[tbsells]

An important clarification: the tax credit cannot be used for the minimum 3.5% downpayment requirement. It can be used for additional downpayment, closing costs, rate buydown, etc. They still want some skin in the game from the buyer.

 

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[bflash98]

Kind of interesting that the FHA was at first planning on letting people use the $8,000 tax rebate towards thier 3.5% downpayment.


Article dated May 22
Return of the no-down payment loan - Money Features

Article dated June 2
Update: FHA backs away from no down payment loans - Money Features

 

[hatterasguy]

They will losen up, but its going to take time.

 

[StreetsofSilver]

The amounts vary by state. I believe that it is only available in certain states that applied for the federal funding. In PA the max loan amount is $6000 for new construction and $5000 for existing homes. The min. amount is $500. The check is cut at the closing. They are including duplexes.

If the tax credit advance is repaid by June 30, 2010 - the borrower pays no interest. Any portion not repaid by the above date becomes a 10 yr. loan and immediately begins to amortize at the same interest rate as the first mortgage.

All residents must not have had an ownership interest in their primary residence in the last 3 yrs., nor may they have a present interest in any other real estate, except a business property if the business is that person's primary source of income.

 

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[TrendSetter]

Great news indeed! Every little bit is helping at this point

 

[Calijess]

In the spirit of "every little bit helps"... If you can find a Freddie Mac home, they have a coupon for 3.5% towards closing costs right now that is addition to the $8k.

 

[phlgirl]

Well, it took a while but the FHA 90 day seasoning rule has finally been lifted. Effective Feb 1, 2010 for at least one year.

There are some restrictions but it is a step in the right direction and should help to get more product moving.

Details here:


U.S. Department of Housing and Urban Development (HUD)

 

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[Cat Man Du]

Hey! Thanks PhlGirl.

In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.

This is what bothers me. All of us need more then a 20% increase in price.

 

[phlgirl]

Hey! Thanks PhlGirl.

In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.

This is what bothers me. All of us need more then a 20% increase in price.

Agreed, it will be interesting to see what the underlying regulations are here. I think as long as you are making improvements to the property and can show evidence of such, it should be okay. In fact, we have to do a lot of that today, in the non-FHA arena. It's more paper-work but you just factor it in and move on. Hopefully, this is a similar situation.

Only time will tell.

 

[Calijess]

This is great if it can help speed up my projects.

 

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[randallg99]

not to rain on anyone's party, but FHA came out with new restrictions:

FHA Raises Down Payments, Premiums Amid Mortgage Delinquencies

Share Business ExchangeTwitterFacebook| Email | Print | A A A By Dawn Kopecki

Jan. 20 (Bloomberg) -- The Federal Housing Administration is raising insurance rates and tightening credit-score rules to combat a rise in delinquencies, making a government-guaranteed mortgage more expensive for U.S. homebuyers.

The premiums FHA charges to insure mortgages will rise to 2.25 percent from 1.75 percent this year, the agency said in a statement yesterday. Borrowers who have credit scores below 580 will also have to make down payments of at least 10 percent, and allowable seller concessions will be cut by half.

The agency, which guarantees almost one-third of loans used in home purchases, is grappling with a 14 percent delinquency rate after taking on more risk to resuscitate the housing market when private industry sources evaporated. Defaults pushed mortgage insurance reserves to the lowest level in history last fiscal year, prompting the Obama administration to take bolder steps in shoring up the FHA’s finances.

“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,†FHA Commissioner David H. Stevens said in the statement.

Affordable housing advocate David Berenbaum, chief program officer for the National Community Reinvestment Coalition in Washington, called the FHA’s changes “prudent.â€

“While borrowers will bear more of the costs of the government insurance program through higher premium charges, the additional revenue will help ensure that FHA stays solvent,†Berenbaum said in a statement. “While some less creditworthy borrowers will need higher down payments, this is a necessary move in markets where a decline in home value can wipe out a new buyer’s equity within weeks after the settlement.â€

Seller Aid

In addition to the upfront premium cost of 2.25 percent, the legal maximum, the FHA said it plans to ask Congress for permission to increase a separate annual premium. The new premium will take effect in the spring, the FHA said, without being more specific. The other changes will happen in the summer.

The FHA is cutting the amount of aid sellers can contribute to homebuyers’ closing cost to 3 percent from 6 percent of the purchase price. The FHA said the higher 6 percent concession led to inflated purchase prices.

The agency’s main credit score-related requirement has been that borrowers with scores below 500 put at least 10 percent down. Most other borrowers received loans with 3.5 percent down. Consumer credit scores, called FICOs after their creator, range from 300 to 850. The median is about 720, according to data provided by Minneapolis-based FICO last year.

Loan Reserves

The U.S. housing market has been kept alive by low interest rates, cheaper homes, a homebuyer tax credit, FHA-related lending and financing initiatives through Fannie Mae and Freddie Mac. The FHA, along with federally controlled finance companies Fannie Mae and Freddie Mac, accounted for more than 90 percent of all U.S. home loans in the first half of 2009.

The FHA’s net capital ratio, or reserves after accounting for projected losses, fell to 0.53 percent in the year ended in September, from 3 percent in fiscal 2008 and 6.4 percent in 2007, according to an annual review published in November.

The ratio is the lowest since the FHA began publishing the data in 1990 and is below the 2 percent reserve threshold the agency is required to maintain by Congress. Donovan said in November that it’s “critical†to build that cushion back up.

While the FHA said at the time that the fund “has good prospects,†it said it would change its risk models to account for the possibility of the ratio falling below zero.

To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net.

 

[hatterasguy]

FHA loans suck, the appraisers are killing us now.