We received an Update today form our Washington, DC contact informing us that the Bush Administration and House of Representatives have apparently come to an agreement, but there is still some uncertainty of what they have agreed to because the Bill is still being drafted. However, one point is pretty much certain, the FHA and GSE limits will be increasing in the near future.
The Administration-House stimulus bill will include a provision raising the FHA limits to a 125% of median sales price with a maximum loan amount of about $729,000. This provision appears to be the House version of the FHA bill. It is believed that the House FHA bill (H.R. 1852) as drafted will also be included in the stimulus. If so the House version will raise the “floor” to 65% of the GSE limit. But our Washington contact stated that they will have to wait and see how the GSE language is written to determine whether the FHA floor will increase to 65% of the temporary limit (i.e. $625,000)
Impact on Current FHA Limits
For FHA, this change raises the current cap of 95% of median sales price to 125% and also raises the maximum from $362,790 to $725,000. For example, if 95% of the median sales price ($368,421) resulted in an FHA limit of $350,000 today, the new limit, if this provision is enacted, would be increased to approximately $460,500. Of course, in a market w/ a median sales price of $500,000 (1.25 times $500,000), the limit would increase to $625,000 and so on. Confusing, I know.
What is Next?
Our Washington contact believes that the legislation will likely be passed by the House very quickly (in the next week). It will then go to the Senate for consideration. But the House and Senate still have to work out the existing differences in the FHA bill including the mortgage limit issue. Of course, the Administration support of the FHA mortgage limit increase will be a positive force behind the negotiation process. In addition Barney Frank has removed the housing trust fund from the FHA bill eliminating a point of controversy. Outstanding issues in the FHA bills are the mortgage limits, mortgage broker approval requirements, risk-based pricing and seller funded downpayment assistance programs.
Our Washington contact also expects this bill to be “fast-tracked” and hopeful passed by February 15th.
Even though this is a little confusing I hope it helps a little bit. Stay tuned for more as I get more Updates.
McCue Mortgage is a Connecticut based Mortgage Co., that specializes in first time homebuyers. However, we are equipped to service all homebuyer with many loan programs.
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FHA has worked wonders for me lately.
Jabin it is also a great loan product for me, and even more so since what has happened to Subprime.
FHA continues to be a great program for many borrowers. I will check back to see what happens in the next few days and weeks. It looks like this will be a good move for consumers. Thanks for the update.
This is great news George. Thanks for the update.
Funny, I just read about this agreement. This can only be good for the market. It should certainly change the attitudes of many people and should bring them back into the market.
Joan, thank you. I wish they would finally pass it and come out with the guidelines so that we can take the guess work out of it.
Jay you are very welcome.
Kate, yes I certainly hope so.
I never knew FHA was such a great tool but now I am able to approve 95% of the applications that come over and assist more families!
George,
These loan limits, FHA and especially Fannie Mae and Freddie Mac are due an increase to reflect more realistically price levels in some states. The GSE limit hikes are going to help high-cost areas like California and some of the East Coast. Let's see what the final result is.
Kurt, we have always done a high volume of FHA Loans at McCue Mortgage because it is a great product, and the proposed changes should make it even better.
Esko, yes these areas will probably benefit the most.
George, this is wonderful news for consumers. FHA is a huge help here North Texas.
Linda, let's hope that they pass the Bill as quickly as expected.
That sounds like a very good thing George.
Monika I think it will be, and should help sell more houses.
I had a transaction close a couple of months ago that was an FHA loan. The one I closed yesterday was VA. I love good programs. And if you were over here I'd just tell my client....call George for details..:)
George - Thank you for keeping us all updated...look forward to hearing when this bill passes and know I can count on you to provide me with all the details : )
George,
Thank you for the great info... very professional...
Rick
George - Thank you for bringing us up-to-date. FHA is a great product and the enhancement would be terrific.
Sally you get it. If Realtors let Loan Officers handle the details of the Loan Programs, and Loan Officers let the Realtors handle the Real Estate details, transactions would go much smoother. The problems come when one try’s to do the others job. You have the right answer, you get the star :)
Sandra, I will Post the information when I get it, glad you are checking on me.
Rick, thank you.
Jennifer, let's hope that the changes open some doors for all of us.
George:
Thanks so much for providing us with this information. Keep us posted please on what you find out!
Fran, I will as soon as I know anything further.
Hey George,
I don't seem to have the time to keep up with all this information so thanks for putting it here for me to see. This way I can count on having you supply it to me as well as the public.
Neal, no problem I will keep you informed my friend.
So 125 percent is good? I get nervous lol
Hi George - thanks for this update. For some reason, no one in my area seems to be promoting this, at least not that I've read about. I don't do a lot of FHA of late, but I used to.
Ann
Carole I don't know if 125% is good enough, but increasing the loan limits whatever that increase may be is good.
Ann if the Lenders in your area are not promoting FHA, then they are doing their Borrowers a disservice, especially to Borrowers with Credit Scores under 680.
Of course I do...that's why I would looovee to work with you on a transaction :)
Sally, I would really like that. We don't know what the future holds for us or it will lead us, so who knows, that might be in our future :)
Hmm - haven't seen this yet. Thanks for sharing! Good News indeed - even with all the ramifications it entails!
Matthew even just raising the Sales Price Limits will be a big help.
George: I thank you too, for keeping updated on what is going on.
I'd like to thank all the mortgage people who can keep this stuff straight. Geez, it's been an up hill battle lately.
Dainne, I will provide more information as I get it.
Dena, even we get a little confused with this stuff at times :)
George, Thanks for the update and I do hope that HR 1852 is included in the package.
Great information. thanks for the update
Tim, yes I hope they include it also
Don you are very welcome.
Cheryl, Buyers do need to be shown some hope these days, especially after what the news media has been putting out. And thank you for the compliment.
George... some good information broken down nicely. I have seen some posts that were very plain and generic on this topic. One loan officer, I think it was Ken Cook, said that another loan officer was happy that they passed this bill. ;o) Amazing on how rumors can get started.
Jeff, miss information is easy to spread. Let's hope a decision is made on this as quickly as is expected.
George - I know when I read your post that I am getting the real deal of what is going on out there instead of an opinion.
Thanks for keeping updated. I look forward to seeing what happens on the 15th.
Susan, thank you for saying that. I try to stick to the facts, and let people make up their own nines from there.
I've found the two main reasons why many escrows with conventional loans are NOT closing are:
1. Decreasing value. conventional financing appraisals are being cut 5%. So if an appraisal comes in at $300,000, lenders are saying the value of the home is actually $285,000. So if the purchase price is $300,000, the buyer has to come up with $15,000 (the difference between $300,000 and $285,000). Then the buyer has to come up with the 5% down on the $285,000 purchase. Many buyers cannot come up with this much money, and, Many sellers cannot simply reduce the price of their home to $285,000 because they often owe more than their home is worth. FHA is not doing decreasing value appraisal cuts.
2. FICO score. More and more banks and lenders have really tightened credit guidelines. Not only do they like to see at least 620+ if not 640+, but they also want really strong credit lines. FHA is much more lenient on credit (although they are NOT a bad credit loan), there is no minimum FICO.
FHA is about 2.7% down payment. That is very low and affordable to many. FHA will help to kick start the real estate market!!
Mortgage George...
Sure looks to me like you need to sit down, relax and whip out (write) a blog post.
C'mon...You can do it. Don't make me go cheerleader on ya :)
TLW...ROAR!
TLW .......... Hmmmmmmmmmmmmmmm I will have to think about that one especially if it involves a uniform ........ LOL
Actually I have a blog almost ready to go about something that happened this week involving mortgage fraud. I just have not had time to go over it and post it yet.