Robert Lowery

FHA insures lenders and enables borrowers to obtain fincancing with as little as 3.5% down payment. It also allows borrowers with less than perfect credit and higher debt ratios.

According to the Wall Street Journal, the Federal Housing Administration will announce its changes and new guidelines Wednesday, January 20, 2010. It is reported that FHA is currently funding over 1/2 of the purchases in many housing markets. FHA is required to have a 2% reserve of their total loans insured, however, this reserve has fallen to about .5%. The downturn in the economy and loose guidelines are obviously the reason for this decrease.

To deal with rising deliquency and shrinking reserves, FHA is forced to make changes or they may be faced with asking congress for taxpayer money. In an effort to increase reserves, the WSJ has reported that FHA will:

1. Increase the Up Front MIP from 1.75% up to 2.25%. (This premium can be financed into the loan.)
2. Increase the Monthly Mortgage Insurance.
3. Decrease seller concessions from 6% to 3%. This will most likely mean many borrowers will need more than the minimum 3.5% down payment.
4. Borrowers with credit scores less than 580 will need 10% down payment. (FHA does not have a minimum credit score, but most lenders require a minimum of 600 or 620.)

As WSJ mentions, FHA is trying to protect taxpayer dollars, while also trying to help the housing recovery. Thus, they will not be increasing the minimum down payment of 3.5%.

It was not mentioned when these changes would take affect. To read the full article, click on the link below:

http://online.wsj.com/article/SB10001424052748704320104575015013235518270.html?mod=WSJ_HomeAndGarden_sections_RealEstate

For all your purchase and refinance needs, feel free to contact me at 410-248-1762 or bob.lowery@prosperitymortgage.com. I am available seven days a week.

Confidential applications can also be completed on our secure website at https://www.homeloans.com/bob-lowery

Regards,

Bob Lowery

Home Mortgage Consultant

Prosperity Mortgage Company

410.248.1762 Tel

443.653.1720 Mobile

Bob.Lowery@prosperitymortgage.com

https://www.homeloans.com/bob-lowery

FHA insures lenders and enables borrowers to obtain fincancing with as little as 3.5% down payment. It also allows borrowers with less than perfect credit and higher debt ratios.

According to the Wall Street Journal, the Federal Housing Administration will announce its changes and new guidelines Wednesday, January 20, 2010. It is reported that FHA is currently funding over 1/2 of the purchases in many housing markets. FHA is required to have a 2% reserve of their total loans insured, however, this reserve has fallen to about .5%. The downturn in the economy and loose guidelines are obviously the reason for this decrease.

To deal with rising deliquency and shrinking reserves, FHA is forced to make changes or they may be faced with asking congress for taxpayer money. In an effort to increase reserves, the WSJ has reported that FHA will:

1. Increase the Up Front MIP from 1.75% up to 2.25%. (This premium can be financed into the loan.)
2. Increase the Monthly Mortgage Insurance.
3. Decrease seller concessions from 6% to 3%. This will most likely mean many borrowers will need more than the minimum 3.5% down payment.
4. Borrowers with credit scores less than 580 will need 10% down payment. (FHA does not have a minimum credit score, but most lenders require a minimum of 600 or 620.)

As WSJ mentions, FHA is trying to protect taxpayer dollars, while also trying to help the housing recovery. Thus, they will not be increasing the minimum down payment of 3.5%.

It was not mentioned when these changes would take affect. To read the full article, click on the link below:

http://online.wsj.com/article/SB10001424052748704320104575015013235518270.html?mod=WSJ_HomeAndGarden_sections_RealEstate

For all your purchase and refinance needs, feel free to contact me at 410-248-1762 or bob.lowery@prosperitymortgage.com. I am available seven days a week.

Confidential applications can also be completed on our secure website at https://www.homeloans.com/bob-lowery

Regards,

Bob Lowery

Home Mortgage Consultant

Prosperity Mortgage Company

410.248.1762 Tel

443.653.1720 Mobile

Bob.Lowery@prosperitymortgage.com

https://www.homeloans.com/bob-lowery

Shawn Donovan is the Secretary of Housing and Urban Development, also known as HUD. This group is oversees the guidelines and finances of the Federal Housing Administration, also known as FHA. Since the collapse in the mortgage industry; Fannie Mae, Freddie Mac, and FHA have been responsible for more than 90% of all mortgages this year.

When considering purchases only, I would estimate 70% of the purchases being financed through FHA in 2009. FHA has been feeling the pain of the economy and mortgage industry just like every one else. Deliquencies are at an all time high and their reserves are extremely low.

Mr. Donovan held a press conference yesterday and discussed several issues and how they plan to address them. They did not release all the particulars, however, here is what they are reviewing and looking to change:

1. Increasing the minimum down payment for buyers, which is currently 3.5% of the purchase price.
2. Reducing the seller concessions from 6% down to 3%. Seller concessions is a term used for seller using their money to pay the buyer's closing costs.
3. Increasing their up front MIP and annual MIP. This is insurance the buyer pays for not going with a conventional loan and putting 20% down. The current premium is 1.75% up front, which can currently be financed into the loan, and .55% annually. The annual premium is paid monthly and included in the mortgtage payment.
4. Increasing minimum credit scores. Currently FHA does not require minimum credit scores, however, most lenders have credit overlays that require scores to be anywhere from 580-640.

If you or anyone else you know is looking to purchase a home in the near future and may be affected by these changes, it is recommended that you act quickly before you are affected. Rates are currently extremely low and the government is still offering the tax credit until April 30, 2009.

Here is the article from Bloomberg:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahaqm8RHB79M&pos=4

Confidential applications can also be completed on our secure website at https://www.homeloans.com/bob-lowery

Regards,

Bob Lowery

Home Mortgage Consultant

Prosperity Mortgage Company

410.248.1762 Tel

443.653.1720 Mobile

Bob.Lowery@prosperitymortgage.com

https://www.homeloans.com/bob-lowery

Homebuyer Tax Credit has not only been extended, but it has also been expanded to include current homeowners. The Senate and House of Representatives approved the bill and the President should sign the bill into law as soon as Friday, November 6, 2009. The following are features of the new bill:

• Deadline for current credit is November 30, 2009.
• Deadline for new and improved credit is April 30, 2010, as long as the home is under contract by that date; deal must close within 60 days.
• Eligibility and amount of new credit:
• $8,000 for first-time homebuyers (those who have not owned a home in the last three years).
• Up to $6,500 credit for homeowners who have lived in the home they are selling, or have sold, as a principal residence for five consecutive years in the past eight.
• Buyers with income exceeding $125,000 for single and $225,000 for married couples are not eligible.
• Homes valued at more than $800,000 are also ineligible.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYnkx.7jfyXE&pos=8

For all your purchase and refinance needs, feel free to contact me at 410-248-1762 or bob.lowery@prosperitymortgage.com. I am available seven days a week.

Confidential applications can also be completed on our secure website at https://www.homeloans.com/bob-lowery

Thanks,

Bob Lowery

Home Mortgage Consultant

Prosperity Mortgage Company

410.248.1762 Tel

443.653.1720 Mobile

Bob.Lowery@prosperitymortgage.com

https://www.homeloans.com/bob-lowery

Homebuyer Tax Credit has not only been extended, but it has also been expanded to include current homeowners. The Senate and House of Representatives approved the bill and the President should sign the bill into law as soon as Friday, November 6, 2009. The following are features of the new bill:

• Deadline for current credit is November 30, 2009.
• Deadline for new and improved credit is April 30, 2010, as long as the home is under contract by that date; deal must close within 60 days.
• Eligibility and amount of new credit:
• $8,000 for first-time homebuyers (those who have not owned a home in the last three years).
• Up to $6,500 credit for homeowners who have lived in the home they are selling, or have sold, as a principal residence for five consecutive years in the past eight.
• Buyers with income exceeding $125,000 for single and $225,000 for married couples are not eligible.
• Homes valued at more than $800,000 are also ineligible.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYnkx.7jfyXE&pos=8

For all your purchase and refinance needs, feel free to contact me at 410-248-1762 or bob.lowery@prosperitymortgage.com. I am available seven days a week.

Confidential applications can also be completed on our secure website at https://www.homeloans.com/bob-lowery

Thanks,

Bob Lowery

Home Mortgage Consultant

Prosperity Mortgage Company

410.248.1762 Tel

443.653.1720 Mobile

Bob.Lowery@prosperitymortgage.com

https://www.homeloans.com/bob-lowery