The upfront premium for all loans will also increase by 0.75 percent on April 1. The upfront premium will thus increase from 1 percent to 1.75 percent of the base loan amount regardless of the amortization term or loan-to-value ratio of the loan. FHA will continue to permit financing of this charge into the mortgage. Finally, on June 1 an additional increase of 0.25 percent will be imposed on FHA-insured loans with principal balances over $625,000 bringing the total hike in those large loan fees to 0.35 percent.

Acting FHA Commissioner Carol Galante said, “After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market. These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

FHA estimates that the premium changes will, in the aggregate, add more than $1 billion to the MIF based on the current volume projections through Fiscal 2013. The increase to the upfront premium will cost new borrowers an average of approximately $5 more per month. The agency said in its announcement that the increases were marginal and affordable for nearly all homebuyers who would qualify for a new mortgage loan.

Details of the rate increases will be published in a Mortgagee Letter to FHA-approved lenders. Borrowers already in an FHA-insured mortgage or Home Equity Conversion Mortgage (HECM) will not be impacted by the pricing changes announced today nor will borrowers in special loan programs which will be outlined in FHA’s forthcoming Mortgagee Letter.

Yesterday, HUD published a request for comments (due in 30 days, by March 26) on their revised changes to policies for seller concessions. The new proposal is to limit seller concessions as follows:
• Reduces the amount of permitted seller concessions to 3% or $6,000, whichever is greater;
• Further limits seller concessions to never exceed the borrower’s actual closing costs;
• Redefines what can be considered as acceptable closing costs to be paid by seller concessions to: closing costs, prepaid items, discount points, up-front MIP, and any interest rate buydown. No longer permitted are “payment supplements” such as HOA/condo fees, mortgage interest payments, and mortgage payment protection plans.
We will provide additional details in a few days. The notice also mentioned that HUD is getting closer to issuing another notice regarding tighter standards for manual underwriting.

Here is a link to the proposed rule -

http://www.gpo.gov/fdsys/pkg/FR-2012-02-23/pdf/2012-3934.pdf

“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” said Stevens.  “This quarter point increase in the annual MIP is a responsible step towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”

The proposed change was announced last week as part of the Obama Administration’s report to Congress, which outlined the Administration’s plan to reform the nation’s housing finance system.  The Administration’s housing finance plan also recommended that Congress allow the present increase in FHA conforming loan limits to expire as scheduled on October 1, 2011.

This premium change enables FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) fund, which had capital reserves of approximately $3.6 billion at the end of FY 2010.  The change is estimated to contribute nearly $3 billion annually to the Fund, based on current volume projections.  It is vital that HUD take action to ensure that FHA will continue to serve its dual mission of providing affordable homeownership options to underserved American families and first-time homebuyers while helping to stabilize the housing market during these tough times.

On average, new FHA borrowers will pay approximately $30 more per month.  This marginal increase is affordable for almost all homebuyers who would qualify for a new loan.  Existing and HECM loans insured by FHA are not impacted by the pricing change.

FHA will continue to play an important role in the nation’s mortgage market in 2011.   President Obama’s FY 2012 budget projects the FHA will insure $218 billion in mortgage borrowing in 2012.  These guarantees will support new home purchases and re-financed mortgages that significantly reduce borrower payments.

FHA Commissioner David Stevens says the temporary waiver will accelerate the resale of foreclosed homes in neighborhoods that are overrun with abandoned properties and blight. The move is intended to help stabilize home values and improve conditions in communities experiencing high foreclosure activity.

FHA regulations typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days, but in February of last year, FHA temporarily waived this regulation through January 31, 2011, noting that in today’s foreclosure-ravaged marketplace, the agency’s research has shown that acquiring, rehabilitating, and reselling distressed properties often takes less than 90 days.

With the sunset date for that first extension just days away, FHA posted a notice on Friday extending the waiver through December 31, 2011. This action will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales.

Author: Carrie Bay • Date: 01/28/2011 @ DSnews.com

Infractions ranged from failing to notify the Department of Housing and Urban Development of changes in license status or office closures, improperly displaying FHA seals on company websites or advertising materials, and using non-employees to process loans, to failing to properly process or document credit, employment and appraisal information.   The actions taken by the Board included permanent withdrawal of FHA lending authority, suspensions, and fines ranging into the high six digits. 

“Lenders should know by now that FHA will not tolerate fraudulent or predatory lending practices,” said FHA Commissioner David Stevens. “Any FHA-approved lender that does business with us must follow our standards. If we determine that our partners are not playing by the rules, we will take action – it’s that simple.”

Firms that were permanently banned from participation in FHA Programs were:

• North Shore Financial, Inc, East Meadow NY for permitting non-employees and/or mortgage brokers to participate in the loan process and other violations.
• Financial Mortgage USA, Inc.; also fined $97,500 for violations of requirements that led to loan defaults.
• Ideal Mortgage Bankers Ltd./Lend America, Melville, NY.; also fined $512,500 for submitting false certifications, failing to adequately document the stability and/or source of income, and other violations.
• Liberty State Finance, Parsippany, NJ; knowingly employing two individuals who were debarred and/or had been convicted of an offense.
• North Shore Financial, Inc., East Meadow, NY; permitting non-employees and mortgage brokers to participate in the loan process and other violations.
• Strategic Mortgage Corp., Oklahoma City, OK was also fined $71,000 for hiring independent contractors and incorrectly reporting compensation to the IRA; improperly charging borrowers a broker fee in addition to an origination fee, and violation of RESPA requirements.
• USA Home Loans, Towson MD; failing to insure that minimum income, credit, and property condition requirements were met and failing to notify HUD that its license had expired.
• U.S. Mortgage Corp, Pine Brook, NJ; failing to maintain an acceptable warehouse line of credit or other approved mortgage funding program.
• Premium Capital Funding/TopDot Mortgage, Jericho, NY; also received a civil penalty of $674,000 for violations of requirements that led to loan defaults.
• ProMortgage, Inc., Claremore, OK; also penalized $124,000 for violations of requirements that led to loan defaults.
• Americare Investment Group/Premier Capital Lending, Arlington, TX; failing to comply with terms of an earlier settlement agreement.
• Ikon Mortgage Lenders, Ft Lauderdale, FL; Federal Guaranty Mortgage Company, Pembroke Pines, FL; Automated Finance Corporation, Calabasas, CA; Premiere Service Mortgage Corp., Westchester, OH.; Direct Lending, Inc., Livonia, MI; Jett Financial Services, Inc., San Diego, CA; closing an office or losing license without notifying HUD

Suspensions of six months to a year and/or civil money penalties were assessed against:

• Meridian Lending, Monroe, GA – One year suspension.
• Action Mortgage Corporation, Cranston, RI – 6 months suspension and $7,000
• Academy Mortgage Corp. Sandy, UT – $30,000
• Assurety Financial Services, Englewood, CO – $7,500
• Cooper and Shein LLC/Great Oak Lending Partners, Timonium, MD – 6 month probation and $11,000.
• Equitable Trust Mortgage Corp., Baltimore, MD – $277,500 civil penalty, refund $147,589 in brokers fees to borrowers.
• Franklin First Financial, Melville, NY – Civil penalty of $413,500; indemnify HUD on 31 loans, and reimburse fees to 78 borrowers.
• Home Mortgage, Inc., Burr Ridge, IL – suspended pending the outcome of a federal indictment.
• Nations Direct, LLC., Irvine, CA – $3,500
• Paramount Bond Mortgage Company, St, Louis, MO – $68,500 penalty; indemnify HUD on nine loans.
• Primewest Mortgage Corp., Lubbock, TX – $168,500.
• Sun West Mortgage Company, Cerritos, CA – $10,000.
• VanDyk Mortgage Corp., Grand Rapids, MI – $7,500; indemnify HUD on two loans

The MRB suspended 905 other companies for one year for failing to comply with the Department’s annual recertification requirements and assessed $3,500 fines against 147 lenders which had been out of compliance but had cured that situation.

All of the actions and the reasons for them were published in The Federal Register dated July 26, 2010

With the resurgence of FHA home loans, many home owners are wondering if they can benefit from an FHA loan. The truth is that you may or may not benefit by converting your existing loan into an FHA loan when you refinance.

Some of the factors that can determine if an FHA loan is right for you:

• Loan To Value
• Home Value
• Size of Existing Loan
• Credit Score
• Amount of Cash You Want to Take Out

With the many changes that have occurred with FHA loans, it is possible that even if you didn’t qualify six months ago, there may be a loan program that is right for you.

One of our mortgage professionals can help you determine if an FHA loan is right for you quickly with no costs.