You will never have to pay to be listed as a top neighbor. Period. That important detail clarified, let's discuss how we arrive at two "top neighbors" for a given region:
Localism is a bustling collection of hyper-local communities, and the top neighbors should reflect those members who are most active. When ranking users in a given region, several factors are considered. To get your foot in the proverbial door, you need to have posted at least one "Localism" article or photo for the region.
The very best way to quickly rise to #1 is to post high-quality local content. Keeping a steady strem of incoming posts and photos will massively tilt the scales in your favor.
What doesn't count toward the top neighbor ranking? ActiveRain points and community sponsorships. The top neighbor spots will always go to the most active members in a region. We want to create a level playing field that encourages the growth of communities — talent and dedication are required to win the day.
An update to the maximum allowable total expense (debt-to-income) ratio to 45 percent, with flexibilities up to 50 percent for certain loan casefiles with strong compensating factors
Retirement of Expanded Approval® (EA) EA-II and EA-III recommendations (except for DU Refi Plus loan casefiles)
Minimum 620 credit score for delivery eligibility (not applicable to DU Refi Plus loan casefiles)
FHA has published five new mortgagee letters. Here is the link to the letters:
We have provided key excerpts from the letters below. (We provided the entire letter on streamline refinance transactions.)
The appraisal letters are effective January 1st (Case numbers assigned). Streamline refinance changes are effective for case numbers assigned 60 days from the date of the letter (September 18th). The counter-party risk letter is effective immediately.
Appraiser Independence - ML 2009-28
New Requirements
Prohibition of mortgage brokers and commission based lender staff from the appraisal process
Historically FHA prohibited mortgagees from accepting appraisal reports completed by an appraiser selected, retained or compensated, in any manner by real estate agents. To ensure appraiser independence, FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender's staff who is compensated on a commission basis tied to the successful completion of a loan.
Appraisal Portability - ML 2009 -29
FHA prohibits "appraiser shopping" where lenders order additional appraisals in an effort to assure the highest possible value for the property and/or the least amount of deficiencies and/or repairs are noted and required by the appraiser. However, a second appraisal may be ordered by the second lender under the following limited circumstances:
1. The first appraisal contains material deficiencies as determined by the Direct Endorsement underwriter for the second lender.
2. The appraiser performing the first appraisal is on the second lender's exclusionary list of appraisers.
3. Failure of the first lender to provide a copy of the appraisal to the second lender in a timely manner would cause a delay in closing, posing potential harm to the borrower.
Potential harm includes events outside the control of the borrower such as loss of interest rate lock, purchase contract deadline, foreclosure proceedings, and late fees.
For cases in 1 and 2 above, the lender must ensure that copies of both appraisals are retained in the case binder. For cases in 3 above, the first appraisal must be added to the case binder when it is received. In all cases, the lender must document why a second appraisal was ordered and retain the explanation in the case binder.
Appraisal Validity - ML 2009-30
Effective for all case numbers assigned on or after January 1, 2010, the validity period for all appraisals on existing and proposed and under construction properties will be 120 days. This change aligns FHA's requirements pertaining to the validity of an appraisal with current industry practices.
This is a change from the current validity periods of six months for an appraisal of an existing property that is complete, and 12 months for proposed and under construction properties.
Strengthening Counter-Party Risk - ML 2009-31
This mortgagee letter provides notice of several FHA program changes as a result of the enactment of the "Helping Families Save Their Homes Act of 2009" (Public Law 111-22) (the HFSH Act). Section 203 of the HFSH Act contains provisions that provide limitations on those eligible to participate in FHA programs, restricts the use of a mortgagee name in advertising and promotional materials, places additional requirements on FHA-approved mortgagees, and expands FHA's authority to pursue civil money penalties for violations of program requirements. These new requirements will help to strengthen FHA's oversight of approved lenders and better manage program risks.
(For new applications in process, it appears that HUD will return the application to you because you now must meet the new criteria.)
Expiration of existing FHA approval: Entities already approved by FHA will not be permitted to renew their status at the next annual recertification date if they are not in compliance with the above-listed eligibility criteria. Effective with the issuance of this mortgagee letter:
· Applications for approval submitted prior to the issuance of this mortgagee letter, but not yet approved, will be returned to the applicant, along with the application fee, for reapplication in accordance with the new criteria listed above.
· The FHA approval for mortgagees that are not approved under the new criteria will expire thirty days after the recertification date.
Streamline Refinance Transactions - ML 2009-32
Below is the entire letter.
This Mortgagee Letter provides (1) revised procedures; and (2) reaffirms existing procedures regarding Streamline Refinance transactions. This Mortgagee Letter is effective for new case numbers assigned on or after 60 days from the date of this letter.
Key Revisions:
· Seasoning
· Payment history
· Net tangible benefit for the borrower
· Maximum Combined Loan-to-Value
· New Maximum Mortgage Amount for Streamline Refinances WITHOUT an Appraisal
· Discounts Points no longer included in Existing Debt for Streamline Refinances WITH an Appraisal
· Verification of any assets needed to close
· Certification that borrower is employed and has income
· Elimination of abbreviated Uniform Residential Loan Application (URLA)
I. Revisions for ALL Streamline Refinance Transactions
A. Seasoning
At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
B. Payment History
At the time of loan application, the borrower must exhibit an acceptable payment history as described below.
1) For mortgages with less than a 12 months payment history, the borrower must have made all mortgage payments within the month due.
2) For mortgages with a 12 months payment history or greater, the borrower must have:
a) Experienced no more than one 30 day late payment in the preceding 12 months,
AND
b) Made all mortgage payments within the month due for the three months prior to the date of loan application.
C. Net Tangible Benefit
The lender must determine that there is a net tangible benefit as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:
· reduction in the total mortgage payment (principal, interest, taxes and insurances, homeowners' association fees, ground rents, special assessments and all subordinate liens),
· refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
OR
· reducing the term of the mortgage.
Reduction in Total Mortgage Payment: The new total mortgage payment is 5 percent lower than the total mortgage payment for the mortgage being refinanced. Example: Total mortgage payment on the existing FHA-insured mortgage is $895; the total mortgage payment for the new FHA-insured mortgage must be $850 or less.
This requirement is applicable when refinancing from a Fixed Rate to Fixed Rate, from an ARM to ARM, from a Graduated Payment Mortgage (GPM) to Fixed Rate, from GPM to ARM, from a 203(k) to 203(b) and from a 235 to 203(b).
Fixed Rate to ARM: Fixed rate mortgages may be refinanced to a one-year ARM provided that the interest rate on the new mortgage is at least 2 percentage points below the interest rate of the current mortgage
ARM to Fixed Rate: The interest rate on the new fixed rate mortgage will be no greater than 2 percentage points above the current rate of the one-year ARM. For hybrid ARMs, the total mortgage payment on the new fixed rate mortgage may not increase by more than 20 percent . Example: total mortgage payment on the hybrid ARM is $895; the total mortgage payment for the new fixed rate mortgage must be $1,074 or less.
Reduction in Term: For transactions that include a reduction in the mortgage term, that loan must be underwritten and closed as a rate and term (no cash-out) refinance transaction.
Investment Properties/Secondary Residences: In addition to meeting the requirement for a reduction in the total mortgage payment, investment properties or secondary residences are not eligible for streamline refinancing to ARMs.
D. Certifications and Verifications
When submitting the loan for insurance endorsement, the lender must include a signed and dated cover letter on their letterhead certifying[1] that the borrower is employed and has income at the time of loan application.
If assets are needed to close, the lender must verify and document those assets.
The lenders must also include the pay-off statement in the case binder.
E. Credit Score
If a credit score is available, the lender must enter the credit score into FHA Connection. If more than one credit score is available, lenders must enter all available credit scores.
F. Maximum Combined Loan to Value
If subordinate financing is remaining in place, the maximum combined loan-to-value ratio is 125 percent.
· For streamline refinance transactions WITHOUT an appraisal, the CLTV is based on the original appraised value of the property.
· For streamline refinance transactions WITH an appraisal, the CLTV is based on the new appraised value.
II. Revised Streamline Refinance Transactions WITHOUT an Appraisal
The maximum insurable mortgage cannot exceed:
· The outstanding principal balance[2]minus the applicable refund of the UFMIP,
PLUS
· The new UFMIP that will be charged on the refinance.
III. Revised Streamline Transaction WITH an Appraisal
The maximum insurable mortgage is the lower of:
1) Outstanding principal balance2minus the applicable refund of UFMIP, plus closing costs, prepaid items to establish the escrow account and the new UFMIP that will be charge on the refinance;
OR
2) 97.75 percent of the appraised value of the property plus the new UFMIP that will be charged on the refinance.
Discount points may not be included in the new mortgage. If the borrower has agreed to pay discount points, the lender must verify the borrower has the assets to pay them along with any other financing costs that are not included in the new mortgage amount.
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