Warren, NJ

HUD has a blunt message for home buyers, lenders, Realtors and anyone else involved in real estate. Despite what you may have heard to the contrary, on January first the federal government expects everyone to be using the new consumer-friendly Good Faith Estimate mortgage disclosures and the new HUD-1 settlement statements.

	NJ Estates Real Estate Group Paul Stillwaggon November 2009 LINKING THE LATEST TECHNOLOGY TO OLD FASHIONED SERVICE Copyright © 2009 Realty Times All Rights Reserved.

The only exception, HUD spokesman Brian Sullivan told Realty Times last week, is if a mortgage application was made in 2009 and the transaction is closed in 2010. The issue here is important to consumers because the new GFE and HUD-1 provide numerous protections the old forms did not. Tops on the list: They make it extremely difficult for loan officers to "low ball" the estimated fees and charges on the mortgage and then later hit homebuyers with surprise increases at closing. Under the old rules, if the estimated fees up front from the lender were $2,000 but the total on the settlement sheet came to $3,000, the homebuyer would have to come up with the difference. That was a huge pain ... and it was abusive. But starting January 1, the lender or broker will be subject to what are known as "tolerance" limits for certain types of fees. Any charges over the limits will have to be eaten by the lender or broker. For example, if a loan officer tells you the origination and processing charges will be $800, he or she won't be allowed to charge you any more than that at settlement. There will be zero tolerance for increases on these fees. Other types of charges, such as for title insurance and settlement services, generally won't be allowed to come in more than 10 percent above the upfront estimate -- unless you the borrower chooses the title company and it's not on the mortgage company's list of recommended firms. In response to industry complaints that some mortgage firms will not have their systems up to speed to comply with the new rules as of January 1, HUD Secretary Shaun Donovan issued a statement indicating that the department would show "restraint" in enforcing the regulations during the first 120 days of the new year. But last week, following mortgage and real estate trade publication reports that the department has postponed the January start date to April 30, HUD's Sullivan told Realty Times that "restraint" doesn't mean that lenders can avoid using the new GFE and HUD-1 forms. All consumers making loan applications on or after January 1 must receive the new forms at application and at closing. "It's as simple as that," said Sullivan. Written by Kenneth R. Harney November 30, 2009 Linking the latest technology to old fashion service. Our realtor's commitment, pride and extensive specialized knowledge has earned us a strong position in the market and we invite you to call NJ Estates Real Estate Group when buying or selling a home, @ (908) 561-5492. -- Contact Us - Back - Paul Stillwaggon, For All Your Real Estate Needs Contact New Jersey Estates Real Estate Group E-mail: njestates@gmail.com Web: http://www.newjerseyestates.net 908-561-5492 (Paul S) 908-310-1358 (Cell) NJ Estates Real Estate Group Weichert Realtors 908-561-5492 55 Stirling Road, Watchung, N.J. 07069 Equal Housing Opportunity

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Congressional pressure on FHA continued to mount last week, with the ranking Republican on the House Financial Services Committee demanding hearings on the stability of the housing agency.

Congressman Spencer Bachus of Alabama said FHA's declining capital reserves, estimated by independent auditors as barely one quarter of the congressionally-mandated minimum, raises the possibility that FHA could come hat in hand to Congress seeking a bailout.

"It is incumbent (that we) get prompt answers to the many questions surrounding FHA's risk management practices and finances," Bachus said in a letter to committee chairman Barney Frank, a Massachusetts Democrat.

Both HUD Secretary Shaun Donovan and FHA Commissioner David Stevens have acknowledged that FHA faces financial challenges as a result of the recession and housing price declines, but insist that there will be no need for appropriations from Congress.

Donovan said the agency is now actively considering ways to raise its capital reserves, including increasing insurance premiums and minimum downpayments. Stevens noted that FHA is cracking down on lenders that underwrite loans poorly or violate agency guidelines.

But the drumbeats on Capitol Hill are getting louder. One bill has been introduced in the House that would require FHA to raise its downpayment minimum from the current 3.5 percent to 5 percent.

On the Senate side, Kansas Republican Kit Bond called the recent audit results further evidence that FHA "is a power keg that will explode unless we act now."

Potshots at FHA also are coming from private industry, including from companies who use its financing.

Robert Toll, the CEO of Toll Brothers, a large, publicly-traded home builder, called the agency's rapid growth -- from a three percent market share a few years back to a 30 percent share of higher of home purchase loans -- "a trainwreck" waiting to happen.

Roughly one in twelve of Toll Brothers home buyers reportedly use FHA financing on their purchase, so Mr. Toll's critique of FHA drew significant attention on Wall Street.

Edward Pinto, the chief credit officer for Fannie Mae during the late 1980s and now a mortgage industry consultant, told Congress recently that FHA should raise its downpayment minimum to 10 percent and slash home seller contributions to buyers' closing costs from six percent of the house price to just two percent.

FHA officials, for their part, insist that the quality of new loans they are insuring is high -- and that capital reserves, even under a worst case scenario, are adequate to handle claims as far out as 30 years.

Paul Stillwaggon, For All Your Real Estate Needs Contact New Jersey Estates Real Estate Group E-mail: njestates@gmail.com Web: http://www.newjerseyestates.net 908-561-5492 (Paul S) 908-310-1358 (Cell)

NJ Estates Real Estate Group Weichert Realtors 908-561-5492 55 Stirling Road, Watchung, N.J. 07069

Equal Housing Opportunity

Current Listings Info
Luxury New Homes
Custom Build A New Home
Land & Building Lots
New Jersey Estates
All New Jersey Homes
Real Estate Listings Blogs
Real Estate Info Blogs
Open Houses & Directions
Our Testimonial Letters
Going Green/ Complete Info