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FHA Update

FHA Update. Florida Association of Mortgage Brokers June 10, 2009 Anthony Britto Sr. Account Liaison FHA - Office of Business Development 305.520.5024 anthony.f.britto@hud.gov. Welcome to FHA.

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FHA Update

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  1. FHA Update Florida Association of Mortgage Brokers June 10, 2009 Anthony Britto Sr. Account Liaison FHA - Office of Business Development 305.520.5024 anthony.f.britto@hud.gov FHA - Serving Homebuyers Since 1934

  2. Welcome to FHA An FHA-insured mortgage is a viable option for many buyers. A mortgage product tailored to the buyer's needs benefits everyone… • The homeowner can afford the payments • The homeowner is happy and satisfied • A happy homeowner refers family and friends to you, their real estate agent 1-800-Call FHA FHA - Serving Homebuyers Since 1934 FHA - Serving Homebuyers Since 1934

  3. FHA was established in 1934 and became a part of the U.S. Department of Housing and Urban Development in 1965 FHA is the U.S. Government’s largest insurer of loans - 4.7 million loans FHA offers mortgage insurance to protect lenders in event of borrower default The insurance protection allows lenders to originate mortgages to those who may not qualify under conventional guidelines FHA does not: Originate, close, fund, or service loans Set the interest rate Determine fees and charges Have income limits FHA Overview 1-800-Call FHA FHA - Serving Homebuyers Since 1934

  4. What About FHA Loans? • Let FHA Loans Help You & Your Buyer • Find an FHA-approved Lender- http://www.hud.gov/ll/code/llslcrit.cfm • FHA Maximum Mortgage Limits- $423,750- ML 09-07 • FHA-approved Condominiums-https://entp.hud.gov/idapp/html/condlook.cfm FHA - Serving Homebuyers Since 1934

  5. Advantages for Buyers Smaller Down Payment – 3½% Flexible Down Payment Sources No Maximum Income or Sales Price Limits – (Subject to Maximum Loan Limits) Buyer doesn’t need to have perfect credit No Prepayment Penalty Loss Mitigation options 1-800-Call FHA FHA - Serving Homebuyers Since 1934 FHA - Serving Homebuyers Since 1934

  6. FHA Benefits • Fully Amortizing Loans – Fixed & ARM • Automated and Manual Underwriting • Traditional and non-traditional credit • Down Payment – can be Gifted or Borrowed • 6% Max. Seller Paid Financing Contribution (C-C’s, Prepaids, Points, I/R Buydowns, UFMIP) • Assumable loan – credit qualifying after 12/1/1986 • Ability to Streamline Refinance without Credit Qualifying • Loss Mitigation options FHA - Serving Homebuyers Since 1934

  7. Borrower Characteristics • Owner-Occupant only • Co-borrowers (occupying and non-occupying) • Co-signers • Citizenship not required; SSN is required • No maximum age • No income limits FHA - Serving Homebuyers Since 1934

  8. FHA Modernization Legislation Housing and Economic Recovery Act of 2008 • Changed Down Payment – 3½% (Loan Amount is 96.5% of SP or Appraised Value, whichever is less) • Cannot finance Closing Costs • Premium Pricing can be used to pay C-C’s and prepaids • Eliminated Seller-funded Down Payment Assistance • Moratorium on Implementation of Risk-Based Premiums New Upfront MIP – 1.75% Annual Prem. - >15 yr - .5% LTV ≤95%; .55% LTV >95% - ≤15 yr – 0% LTV ≤90%; .25% LTV >90% 1-800-Call FHA FHA - Serving Homebuyers Since 1934

  9. Sample Calculation - Basic Sales Price: $218,000 Appraised Value: $220,000 Max. Mortgage: $218,000 x 96.5% = $210,370 Down Payment: $218,000 – 210,370 = $7,630 Upfront MIP: 1.75% x $210,370 = 3681.48 Total Loan Amount : 210,370 + 3,681 = 214,051 Note: The maximum mortgage shown does not consider any closing costs that must be paid by the borrower. FHA - Serving Homebuyers Since 1934

  10. Sample Calculation – Inducement to Purchase Sales Price: $218,000 Appraised Value: $220,000 Gift Card: $3,000 Adjust. to SP: $218,000 - $3,0000 Max. Mortgage: $215,000 x 96.5% = $207,475 Downpayment Calc.: $218,000 - $207,475 - $10,525 The gift card value provided by the seller must be subtracted from the Sales Price (SP). Sellers are still permitted to provide seller financing concessions up to 6% of the SP. Other inducements to purchase must be subtracted from the SP or Value when calculating the max. mortgage amount/downpayment. FHA - Serving Homebuyers Since 1934

  11. FHA Modernization Legislation • Condominiums- Still in process • Tax Credit- ML 09-15 • HECM for Purchase- ML 08-33 • HECM Maximum Loan Limit - $625,500 • HECM Counseling Requirements- ML 08-28 • Independence of HECM Mortgage Originators • Prohibition against requirements to purchase additional products as a condition for HECM eligibility 1-800-Call FHA FHA - Serving Homebuyers Since 1934

  12. FHA Modernization Legislation • Energy Efficient Mortgages • Mfg. Housing (Title I)– Raised Maximum Mortgage amounts to: - $25,090 for Repair/improvements - $69,678 Unit - $92,904 Unit and Lot - $23,226 Lot only Indexed to adjust limits 1-800-Call FHA FHA - Serving Homebuyers Since 1934

  13. What This Means for You • Larger Loan Amounts, Higher Sales Prices • Client and Market Expansion • More opportunities for the Industry • More business for you! • More Options for More Consumers • More Sensible Mortgage Products • Simplification of Lending Process FHA - Serving Homebuyers Since 1934

  14. FHA Programs • HECM for Purchase (Reverse Mortgage) • Energy Efficient Mortgage • HUD Homes • Good Neighbor Next Door • Fixed Rate/ARMs • Purchase • Refinance • Rehabilitation • Standard • Streamline • Manufactured • Housing-ML 09-16 FHA - Serving Homebuyers Since 1934

  15. Standard Repairs/Improvements must be at least $5000 Consultant required Architectural Exhibits required Borrower can make repairs/improvements if qualified Streamline Facilitate uncomplicated repairs/improvements No consultant required No architect required Borrower can make repairs/improvements if qualified Include up to $35,000 Rehabilitation Mortgages FHA - Serving Homebuyers Since 1934

  16. HECM for Purchase • Borrower – seniors age 62 or better • Reverse Mortgage counseling required • Property – 1-4 family dwellings, existing only • Owner–Occupied only; within 60 days from closing • At closing, only the HECM 1st & 2nd liens allowed • FHA’s Property Flipping prohibitions apply • At closing, buyer must provide monetary investment equal to difference between HECM principal limit and sales price, plus HECM loan related fees not financed or offset by other allowable funding sources FHA - Serving Homebuyers Since 1934

  17. HECM for Purchase Appraised Value/Max. Claim Amt.* $300,000 Sales Price $300,000 Principal Limit** $199,500 Minus Loan Fees ($15,500) Avail. HECM proceeds $184,000 Required cash investment $116,000 *AV/MCA is the MCA used to determine the principal limit which is the lesser of the appraised value or the FHA national mortgage limit. The principal limit is the max. amount available to the HECM mortgagor. **Assumes the age of the youngest borrower is 67 and a principal limit factor of .665 for a 5% expected average interest rate. FHA - Serving Homebuyers Since 1934

  18. Energy Efficient Mortgage Program (EEM) • Eligible for new or existing 1-4 family units • Maximum Loan in Area Can Be Exceeded by the EEM Amount • Eligible for use with Rehabilitation Mortgages (203K) • Available for Condos and Manufactured Homes • Cost of improvements that may be eligible for financing is either 5% of the property’s value (not to exceed $8,000) or $4,000, whichever is greater. 1-800-Call FHA FHA - Serving Homebuyers Since 1934

  19. Selling HUD Homes • What are HUD Homes? • Register to Sell HUD Homes • Electronic Internet Bidding • Current Listings • Management & Marketing Contractors (M&M) FHA - Serving Homebuyers Since 1934

  20. What Are HUD Homes? • HUD-owned houses are often referred to as “HUD Homes.” HUD Homes are houses that had an FHA-insured mortgage and the homeowner defaulted. The lender then deeded the home to the Secretary of HUD in exchange for an insurance claim payment. FHA - Serving Homebuyers Since 1934

  21. It’s Easy to Sell HUD Homes • Brokers can register with HUD’s M&M Contractor for Florida properties, NHMS, through their website, www.nhmsi.com • Once completed, the broker can show, advertise, and submit offers on HUD Homes • HUD pays the broker a commission of up to five (5) percent • HUD-registered brokers and their agents are able to submit bids 24/7 over the Internet. Electronic bidding is the only method to submit bids for HUD Homes FHA - Serving Homebuyers Since 1934

  22. Management & Marketing Contractors • M&M contractors manage and market single-family properties owned by, or in the custody of, the Department • The geographic service areas covered by each of the M&M contractors, their mailing addresses, telephone numbers, fax numbers, and internet addresses are provided on the HUD website FHA - Serving Homebuyers Since 1934

  23. Current Listings Listings of HUD Homes are available through: • www.hud.gov/homes • MLS • M&M Internet sites • www.homesales.gov FHA - Serving Homebuyers Since 1934

  24. Help for Your Buyer • HUD Home Buying Guide • Housing Counseling • Increased FHA Mortgage Loan Limits • Broward, Miami-Dade, Palm Beach • 1 Unit - $423,750 • 2 Units - $542,450 • 3 Units - $655,700 • 4 Units - $814,900 • https://entp.hud.gov/idapp/html/hicostlook.cfm FHA - Serving Homebuyers Since 1934

  25. Helpful Resources – fha.gov 1-800-Call FHA FHA - Serving Homebuyers Since 1934 FHA - Serving Homebuyers Since 1934

  26. hud.gov 3 1-800-Call FHA FHA - Serving Homebuyers Since 1934 FHA - Serving Homebuyers Since 1934

  27. Contacting FHA WebsitesFHA Call Center www.fha.gov800-Call FHA www.hud.govLive Web Chat www.espanol.hud.govTBA www.fhaoutreach.gov/fhafaq Locate a Housing Counselor 800-569-4287 To Sign Up on FHA’s List serve listserv@hudlist.hud.gov FHA - Serving Homebuyers Since 1934

  28. FHA’s Commitment to Our Real Estate Partners • FHA’s goal is to provide Safe and Affordable Mortgage Products that Support Sustainable Homeownership • FHA recognizes the Key Role the Real Estate Professional plays in the Mortgage Finance Industry • Thank you for Your ATTENTION!!! FHA - Serving Homebuyers Since 1934

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