The "NEW" 2009 FHA MARKET

Many Realtors never thought they would have to touch a buyer purchasing a home through FHA financing. Now it consists of 80% of the business Realtors currently do. (Based my personally interviews) FHA lost significant business between 2001-2008 due to conventional sub-prime loans.

FHA products are great for first time homebuyers but you don't have to be a first time homebuyer. With the risk based PMI insurance companies tightening, buyers who are putting less than 20% down and have a credit score less than 700 (within the FHA loan limit)should consider an FHA loan as a financing option.

Requirements

Borrower

•1. Client needs little to no money down, 3.5% down

•2. Less than perfect credit allowed(as of 4/13/09 580 minimum credit score)

•3. 6 percent seller paid concessions

•4. All down payment funds can be gifted

•5. No reserve requirements

•6. No income limits

•7. very competitive interest rates

•8. Limited to owner occupied property

•9. available for 1-4 unit properties

•10. High LTV for owner occupied 4 unit property

•11. manual underwriting allowed

•12. Borrowers in a Chapter 13 bankruptcy with 1 year of on time payments can buy

•13. 2 years out from discharge date on a chapter 7 Bankruptcy

•14. 3 years required from Foreclosure sale date

•15. Manufactured housing is allowed

•16. Letter of explanation is needed on all bad credit on their borrowers report

Property

FHA appraisers are required to not any major defects such as Evidence of termites, inoperative or inadequate plumbing, heating or electrical systems. Structural failure in framing members. Leaking or worn-out roofs. Cracked masonry or foundation damage drainage problems.

Examples of minor property conditions that DO NOT require Automatic repair for existing properties include, but are not limited to:

• Missing handrails
• Septic Systems unless evidence of system failure
• Cracked or damaged exit doors that are otherwise operable
• Cracked window Glass
• Flat and/or unobservable roof unless there is a problem.
• Defective floor finish or covering (worn through the finish badly soiled carpeting)
• Evidence of Previous wood destroying insect damage.

Comparison Approach:

• Usually the most applicable approach in estimating the market value; Selection of comparable Age of comps should not exceed 6 months
• over 12 months is unacceptable per HUD.
• Underwriter or Investor may not accept anything over 6 months or require fully acceptable explanation.
• Current offerings and listings are used as supplemental data only.

• Property Flippers PLEASE TAKE NOTE; Current owner must be on title 90 days.

Loan Limits:

Limits rang per county from as low as $271,050 and as high as $729,750 for Single Family Residences in the state of Colorado. (For current FHA loan limits in your county you can contact me just email and put in your county and number of units)

Changes,

Some of the main changes that agents should be aware of are. The current Up front mortgage insurance premium on Purchase loans is 1.75% the Monthly Private Mortgage Insurance is .55% on purchases up from last year.

Last year there were 40 mortgagee letters amending these items so this was almost changing on an every 10 day basis.

Marketing,

Freedom Financial Services markets to First time home buyers on several of the top Denver Radio stations. I add give updates on Mondays at my twitter page www.twitter.com/jhaddan in order to keep my clients and referral partners informed. I will make other updates if rates have increased or if there are currently changing mortgagee letters with guideline changes. These have an option to be received by text message.

We do a monthly Realtor Seminar at our office for Realtors who want to learn more about FHA and Assistance programs available in the Denver Market.

I have been originating FHA loans since 2001. I often give credit to my most influential top of the line manager Rosella Manning who is one of the true FHA CHFA Queens of Colorado. It has been my pleasure to help borrowers with their financing through FHA. I would encourage Realtors to look at our market as an opportunity to connect and build stronger relationships with loan officers starting today.