The Regan Team - Petaluma Homes & Mortgage Blog - PetalumaLending.com

On Wednesday January 25^th HUD released an announcement detailing how it would monitor lenders default rates and the consequences for not meeting their guidelines.  Later in the press release there was a small mention on a topic that could make FHA loans more expensive for the consumer.

They announced they’re going to issue a proposal to limit seller concessions.  Currently FHA allows up to a 6% seller credit for closing costs, under the proposed rules mentioned in their July 15^th 2010 memo, it would be reduced to 3%.

How would this make a difference?

FHA loans require tax and insurance impounds and there are times when up to 9 months of property taxes need to be collected.  In high costs areas this cost alone would eat up a large portion of a 3% seller credit and cause the buyer to come in with additional money.

With the reduction it could also prevent borrowers the ability to pay the 1% upfront mortgage insurance premium to be paid by the closing costs, forcing them to roll it into the loan amount and paying interest on it for the term of the loan.

Once HUD publishes the proposal there will be a 30 day public comment period before they make a final ruling; there’s no set date for this to take effect.

Any residential property that changes ownership more than one time in a 12 month span is considered a flip.  Previously HUD did not allow FHA loans on properties that had been flipped less than 90 days from the most recent ownership change.

In January 2010 HUD created a special waiver that allowed FHA financing on flips less than 90 days; that waiver was set to expire December 31, 2011.  HUD recently announced that the waiver has been extended through 2012.

As in last year’s waiver there are a few guidelines that must be met:

•    All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

•    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. (Generally this means that the lender will need to do two appraisals to justify the increased price.)

A few other things to note:

-There are some lenders that still will not offer FHA financing on flips less than 90 days.

-The lenders that are allowing it can be more restrictive on debt to income ratios.

-Many require a home inspection and to have all items noted by the inspector fixed before closed of escrow.

This is great news for FHA buyers and the home market in general.  Be sure to check with your lender if you’re considering making an offer on a flip less than 90 days to make sure they can offer this financing and what their requirements are. 

There have been a few welcomed changes to VA loans in 2011 including a lowering of the upfront funding fee; you can read more about that HERE

In 2012 there is another change coming; lower loan limits.

You can find current VA loan limits by clicking here

The basics are:

Sonoma County: $419,750 down from $478,750

Marin County: $625,500 down from $1,000,000

Napa County: $460,000 down from $530,000

This change will not affect most VA buyers as the new loan limits are more than adequate for each county and if needed the 2012 FHA loan limits allow for higher purchase prices with only 3.5% down.

On October 1^st 2011 Congress allowed the high balance loan limits on Freddie Mac, Fannie Mae, and FHA loans to be reduced to 115% of the medium home price of each county.  In Sonoma County the limit went from $662,500 to $520,950; a $141,550 drop.  In Marin it dropped $104,250 from $729,750 to $625,500.

On November 18^th 2011 Congress renewed the higher limits for FHA loans through 2013.  At this time Fannie Mae and Freddie Mac are staying the same.  So if you’re looking to purchase a home here are the new loan limits:

 

Sonoma County:

FHA: $662,500

Fannie Mae and Freddie Mac: $520,950

 

Marin County:

FHA: $729,750

Fannie Mae and Freddie Mac: $625,500

 

Napa County:

FHA: $729,750

Fannie Mae and Freddie Mac: $592,250

 

This increase will help many buyers secure more affordable financing and help the battered housing market recover.

Click here for current FHA loan limits

In November of 2011 the Obama administration announced a revamped Home Affordable Refinance Program or HARP for short.  The initial HARP program was released in 2009 but limited an upside-down homeowner to a maximum loan to value of 125%.  With so many homes more than 25% underwater, the program needed to be updated.

So here are the new rules (only applies to Fannie Mae and Freddie Mac loans):

- December 1^st, 2011 is first day applications may be taken.  If you’re more than 125% loan to value you must wait until sometime in March 2012 when Fannie Mae’s underwriting system is updated.

-No maximum loan to value; even if you’re 100% or more upside-down you may be able to refinance.

-Your current loan and new loan must be over 80% of your current home value.  (If you owe equal to or less than 80% of your home value you can refinance under the standard refinance rules)

-Fannie Mae and Freddie Mac are reducing and/or eliminating some risk based fees making the rates better.  Under the original HARP there were risk based adjustments that could add up to 3 points to the rate.

-Your current loan must have been sold to Fannie/Freddie on or before May 31^st 2009.

-If you refinance through your current servicer then they may only verify that you have a job and/or an income source but not verify the amount; basically a stated loan.  They’ll pull your credit but if you go through your current servicer your score shouldn’t matter.  If you go through another bank you’ll most likely have to fully document your income/assets/employment and qualify under normal loan guidelines (your credit score and debt to income ratio will matter here).

-If you have a 2^nd mortgage you can’t combine the 2^nd into a new loan.  Your existing 2^nd mortgage will have to agree to subordinate behind the new HARP 1^st mortgage.

-If you have existing mortgage insurance your current mortgage insurance company will have to agree to switch over the coverage to the new loan.  This is completely voluntary on their part so there are no guarantees.

-Eligible properties include one- to four-unit primary residences, second homes, and one- to four-unit investment properties, including single-family homes, condos, co-ops and manufactured housing.

 

What will make you ineligible for a HARP 2 refinance?

-Can’t have late payments in last 6 months and not more than one in the last 12.

-If you’ve refinanced under the HARP 1 program you’re ineligible.

-If your current loan is not owned by Fannie Mae or Freddie Mac.  (Click this link to find out if FREDDIE MAC owns your loan, click this one to find out if FANNIE MAE owns your loan)

This updated program may be able to help thousands of Sonoma County, Marin County, and Napa County home owners to stay in their homes as well as save them thousands in interest.

For more details on the HARP 2 program here are the press releases for FANNIE MAE and FREDDIE MAC.

 

The Adobe Pumpkin Patch in Petaluma, CA has been a family tradition for years. It’s located at 2478 East Washington Street in Petaluma and it’s open from 10am-6pm daily; weather permitting.

There’s something for everyone from hay rides, farm animals, food vendors, farmers market, a haunted barn, and of course hundreds of pumpkins to choose from.  My favorite is the Halloween store that always has great decorations for sale.

The farm is open from late September through Halloween. For more information call them at 707-763-6416 or visit online at www.adobepumpkinfarm.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The last few years most loan programs have increased their fees.  FHA has increased its monthly mortgage insurance from .5% to 1.15% and USDA as of October 1^st, 2011 is adding monthly mortgage insurance to its loan.

The goods news for Veterans is that due to the “Restoring GI Bill Fairness Act of 2011” their loan fees are going down!

Currently a Veteran using a VA loan for the first time will be charged a 2.15% funding fee, as of October 1^st, 2011 that’ll drop to 1.40%.

On a $400,000 loan that’s a savings of $3000.

There’s no monthly mortgage insurance on VA loans and you can finance 100% of the purchase price of a home.

In Sonoma county you can get up to a $419,750 loan, in Marin $625,500, and in Napa $460,000.

Here’s the breakdown of the new fees:

Down payment less than 5 percent:

Prior to October 1, 2011

Active Duty – 2.15%
Guard/Reserve – 2.40%

On or after October 1, 2011:

Active Duty – 1.40%
Guard/Reserve – 1.65%

At least 5 percent but less than 10 percent down payment:

Prior to October 1, 2011

Active Duty – 1.50%
Guard/Reserve – 1.75%

On or after October 1, 2011:

Active Duty – 0.75%
Guard/Reserve – 1.00%

10 percent or more down payment:

Prior to October 1, 2011

Active Duty – 1.25%
Guard/Reserve 1.50%

On or after October 1, 2011:

Active Duty – .50%
Guard/Reserve .75%

Second or subsequent use VA loan funding fees are the same for both active, Guard, and Reserve:

Less than 5 percent down payment:

-October 1, 2007 until October 1, 2011
3.30%

-October 1, 2011 until October 1, 2012
2.80%

-October 1, 2012 until October 1, 2013
2.15%

-On or after October 1, 2013:
1.25%

At least 5 percent but less than 10 percent down payment

-Prior to October 1, 2011

Active Duty – 1.50%
Guard/Reserve – 1.75%

On or after October 1, 2011:

Active Duty – 0.75%
Guard/Reserve – 1.00%

10 percent or more down payment

-Prior to October 1, 2011

Active Duty – 1.25%
Guard/Reserve – 1.50%

– On or after October 1, 2011:

Active Duty – 0.50%
Guard/Reserve – 0.75%

For more information about VA loans click HERE

For current VA loans limits click HERE

On October 1^st, 2011 USDA is making a few changes to its home loan program. Currently USDA allows a 100% home loan in designated areas, with a 3.5% upfront funding fee (that can be rolled into the loan amount), and no monthly mortgage insurance.

Under the new rules USDA will still allow a 100% home loan, but is reducing the upfront funding fee to 2% (that can be rolled into the loan amount), and adding a monthly mortgage insurance premium of .3%.

So how does this look?

Current numbers on a $300k USDA Loan at 4.5%:

$300k base loan amount + $10,500 (3.5% upfront funding fee) = $310,500 total loan

Principal and Interest payment = $1573.26

Under the new USDA home loan guidelines on a $300k loan at 4.5%:

$300k base loan amount + $6,000 (2% upfront funding fee) = $306,000 total loan

Principal and Interest payment = $1550.46 + $76.50 monthly mortgage insurance = $1626.96

Or an increase of $53.70/month

Now this may not seem like a lot but it equates to about $10,000 less in buying power in this example.

For more information on the USDA 100% home loan click HERE

The California State Teachers Retirement System is discontinuing their 80/17 program that allowed CalSTRS members to purchase a home with a 17% second from CalSTRS and 3% down from their own funds making home ownership more attainable. 

As of October 1^st 2011, a new program will replace it called Home Connection.  Here are some of the highlights:

-80% 1^st lien mortgage (30yr fixed)

-15% 2^nd lien mortgage from CalSTRS (30yr fixed)

-Interest rate on the 2^nd lien will match that of the 1^st

-5% down payment from CalSTRS member

-700 minimum credit score on single family residences

-740 minimum credit score on condos

-60 day rate lock

This new program will keep home ownership a reality for many with less than 20% down, but like the rest of the lending industry, the program has tightened their guidelines and increased the down payment requirement.

 

PMI, the private mortgage insurance company that helped millions of people with low down payments purchase a home is no longer in business. As of Friday August 19th they stopped issuing mortgage insurance for those with less than 20% down. Here’s the announcement:

 

So what does this mean for those with less than 20% down?

Nothing right now; there are other mortgage insurance companies such as MGIC, RMIC, Radian, and Genworth that still provide these services. That being said it’s a trend that should be watched closely; if one of the most popular and biggest private mortgage insurance companies closed its doors, another could be next.