Sue Botelho-USDA Rural Housing Mortgage Pro

USDA Rural Development has confirmed that the proposed change in the income limit structure for the USDA Guranteed Rural Housing Program will be implemented as planned on April 20^th! This will allow a lot more people to qualify for one of the only 100% financing programs left, and certainly one of the only ones that allows you to include closing costs in the mortgage (if supported by the appraisal)!

In summary, the current income limit structure that is based on household incomes will be restricted as follows:

Okaloosa County:

Household of 1-4 persons in it: Max Gross Income of $72,650

Household of 5-8 persons in it: Max Gross Income of $95,900

Walton County/Bay County/Santa Rosa County/Escambia County:

Household of 1-4 persons in it: Max Gross Income of $70,750

Household of 5-8 persons in it: Max Gross Income of $93,400

We cannot submit any loans with these increased income limits to USDA until April 20 but we can take applications and get the file processed prior to that date. This should be a huge boost to our market as more people will be able to purchase with absolutely no money down!!!!!

Contact me and let's get you or your client prequalified and closed with NO MONEY DOWN!!

We have now had our first full week of a new year and I wanted to tell you "Happy New Year" and I hope that 2009 will be awesome for you.

As you are aware, there were many changes implemented in 2008 and at the beginning of 2009, and will be more forthcoming. I wanted to give you a run down on them since it affects all of us and how we can get buyers to the closing table. I feel it is a lenders' responsibility to keep you, the Realtor®, abreast of what is happening to help you to keep and grow your business and I take that responsibility extremely seriously!

If you have any questions about the following information, please do not hesitate to contact me! I am going to use bullet points for these changes but please know that there may be a lot of information in regards to each one so this may be a little lengthy. However, I feel it is so important that you should take some time and make sure you read it so that you know how your business has been or will be affected!

· USDA Rural Housing Loan - Increased Income limits/Availability of Funds: Effective January 20, 2009, the income limits for this program are being INCREASED for those persons/families that have 1-3 in the household and for those that have from 5-7 in the household. This will help a larger number of people qualify for this program! **PLEASE NOTE: MANY OF YOU ARE HEARING THAT USDA IS OUT OF MONEY - While they are not currently insuring loans (they do not EVER lend money, only insure the mortgage), we are STILL DOING THEM AND EXPECT NO INTERRUPTION OF THIS PROGRAM! I am a national trainer for this program and have been in contact with personnel at the national level of USDA and we see this continuing uninterrupted for us based on how we are set up with the USDA so please, if you have any current loans in process somewhere that were going USDA and have been told they can't do it, which IS happening, have your client call me and let's get them closed before their contract expires!

· Maximum Mortgage Amounts: FNMA has kept their conforming loan limits in our area to $417,000. FHA has DECREASED the maximum loan limit in Okaloosa, Walton, and Bay Counties as follows: Okaloosa: $271,050 (was $312,500 in 2008), Walton: $325,450 (was $362,790 in 2008), and Bay: $271,050 (was $396,250 in 2008). In Santa Rosa County, it remains in 2009 where it was in 2008, which is $271,050.

· Repairs to Properties that Are Being Purchased: Many properties being sold are short sales or foreclosures and are being sold "as is". In some cases, the condition of the property isn't such that a lender can do a mortgage secured by the property and sales are falling by the wayside. Please note that there are programs available where a buyer can finance in costs of repairs and close prior to those repairs being completed. On an FHA loan, the maximum amount of the repairs is $35,000; on a USDA Rural Housing loan, the maximum amount of the repairs is $6,650. In the case of the USDA, these most be repairs that are noted by the appraiser on the appraisal; in the case of the FHA, a buyer can purchase a home and remodel the kitchen (amongst other allowable projects) and finance the costs and they do not have to be noted in the appraisal!

· Conversion of primary residences to investment property or 2^nd home: (This is used for FNMA, FHLMC, FHA, USDA, and VA currently; the only exception is if the buyer is transferring or moving a long distance.) If you have a buyer that is purchasing a new primary home but who will still own their current primary home when they go to closing, there are restrictions as far as being able to approve the new mortgage. In order for a client to rent their old home AND use the rental income to qualify, they MUST HAVE 30% equity in the old home. No ifs, ands or buts on this. If they do, and we have to verify that they do, we can use 75% of the lease amount to count against their mortgage payment. We would have to have the lease, a copy of the deposit check from the tenant, AND a copy of the receipt where the buyer deposited the security deposit into their bank account. If they don't have the 30% equity, the buyer must qualify for both payments AND have documented reserves (money in the bank) after closing of 6 full months of PITI (principle, interest, taxes and insurance) for BOTH PROPERTIES. If they are converting their current primary to a 2^nd home, the same applies as far as qualifying with both payments and having the 6 months' reserves for both properties.

· Ordering of appraisals: Currently, we are able to select the appraisers from our list of approved appraisers. On May 1, 2009, there are new guidelines in place referred to as the "Home Valuation Code of Conduct", or HVCC for short. Here is a link to this code but, in essence, mortgage lenders, brokers and bankers will no longer be allowed to be involved in the selection of the appraiser, nor to have contact with them or even give them an estimated value of the property past sending them a copy of the sales contract for purchases. We are still learning about this code and how it will affect us and I will keep you abreast as I find out more. You can read the code here to see it in its entirety and how it may affect you and your clients.

· Stated Income Loans: There are many schools of thought as to what caused the mortgage meltdown last year and a lot of people feel that the stated income and no doc loans were the biggest cause. Investors, for the most part, have done away with these loans and those that still offer them require the buyer to sign a Form 4506-T. This form is the Request for Copy of Tax Forms that is sent to the IRS to determine that a borrower's income qualifies them for the loan. These are being executed prior to closing so, in essence, a stated income loan these days is ONLY FOR CONVENIENCE TO A BORROWER - their income is going to be verified before closing. The sole purpose of a stated income loan these days is so that a client doesn't have to find and send their tax returns to the lender; the lender will still be verifying their income.

· How Bankruptcy and Foreclosure (including deed in lieu and short sales) Affect the Ability to Buy a Home in the Future: In August, FNMA developed new guidelines for how long a potential buyer must wait after certain actions that are reported on their credit report. For instance: There was no existing policy on how long a person had to wait if they had multiple bankruptcy filings, except the 2-year that WAS required for a Chapter 13; now, a person with multiple bankruptcies must wait 5 years from the most recent dismissal if they have had more than one BK in the last 7 years. It used to be that they had to wait 4 years after the date the foreclosure sale was completed it is now 5 years with additional requirements that apply after 5 years and up to 7 years.

· Down Payments and FHA: The downpayment assistance program, ie: Nehemiah and Ameridream, that were used to help buyers using the FHA mortgage program have a gift of the downpayment from a charitable organization was completely done away with. Also, effective January 1, 2009, the down payment required on an FHA mortgage went from 3% to 3-1/2% in all cases.

· Condos or Attached Properties in Florida: Most investors, and certainly FNMA, FHLMC, FHA, VA, and USDA will no longer allow mortgages on properties that have one or more of the following: the word "resort" in the title of the project, the availability of nightly or weekly rentals within the project, an on-site rental desk, a large percentage of delinquent HOA dues, housekeeping services, electricity that is not on an individual meter, etc. Because of this, we are unable to offer fixed rate mortgages in projects that exhibit one or more of these traits. HOWEVER, we have found alternative lenders offering portfolio programs, which are ARMs in all cases, and CAN STILL FINANCE THESE CONDOS AND CONDOTELS! There are larger down payment requirements that in the good old days, but we are able to assist your buyers and get these units closed. These days, underwriters are googling the name of the project and if they find these traits, we are dead in the water except with these portfolio programs. Also, many investors have stopped allowing above 80% financing on attached units in Florida, and some cap that at 70%! These are townhomes, not condos, and we are able to still finance them up to 100% in many cases so please make sure to have any buyers you have that need financing call us.

· Mortgage insurance - Mortgage insurance, or PMI as many refer to it, has changed tremendously. There are currently no mortgage insurers that will insure a 2^nd home or investment property in the state of Florida. This is why it has become basically impossible to find a 2^nd home or investment property mortgage with less than at least 20% down, and in some cases even more.

· Maximum Number of Financed Properties: Effective in 2008, most investors have now limited the maximum number of financed properties a buyer can have to FOUR, including their primary home. This includes properties that are owned in a trust or LLC and properties that they own with someone else personally. This does not include commercial or multi-family housing properties above 4 units but does include 1, 2, 3 and 4-unit properties. **This is one of the biggest points I made during my interview with Good Morning, America - if they would allow those people who truly qualify for more than 4 to purchase, there would be a lot more sales nationally as many people would love to scoop up the great deals but are unable to secure financing. If they have good credit, good (and deep) reserves, a history of having rented property, and their debt to income ratio including all of their properties is under 45%, is, in my eyes, ridiculous to not allow them to purchase a property! They should allow this and, to insure themselves, set up a fund, much like the upfront mortgage insurance on an FHA loan, that keeps funds available should any of these buyers default!

While these do not represent all of the changes made and upcoming, these are the ones that most affect us at this time. I will make sure to keep you informed of any and all changes that come out so that you are better able to perform your job and get your buyers to closing.

I was interviewed Thursday for a show that is supposed to air on Monday, December 15 on Good Morning, America. It's about the housing market and how to help people who are behind, as well as what steps could be taken to improve the housing market. I made the following points, but they may edit a lot of it out. I hope you get an opportunity to watch! Thank you to Beth Forbes for part of her ActiveRain post - I made SURE to get that out there, as well!

1. Until we get housing out of it's "deep depression", the rest of the economy doesn't stand a chance and people won't buy cars until their housing is fixed!. Let's get a government program together that lends money to people who already own multiple properties, who have excellent and deep credit who actually WANT to buy up the over supply of inventory. There are a large number of investors who own multiple properties that actually produce income for them who would just LOVE to buy up some of the great deals available right now but are hamstrung by current lending guidelines that say they can't own more than 4 financed properties. They need to let QUALIFIED investors purchase real estate even if they have more than 4 mortgaged properties already! If they have good and deep credit, have low debt to income, say under 45%, using verified income, have a history of managing rental properties, and have reserves, they could HELP the housing slump by purchasing excess inventory; as it is, with the limitation of FNMA and FHLMC, they can't buy if they own 4 mortgaged properties already which includes their primary home unless they have cash or get portfolio loans which are higher down payments at higher interest rates, which don't make sense for them and they limit the properties they purchase. You can even have it where they must pay an upfront "loss reserve" payment similar to the upfront MIP on an FHA loan and monthly "loss reserve" payments much like monthly MI. Any plan that does not include provisions for these people is underutilizing a private sector solution to what is becoming a government problem.
2. Investors/lenders need to work quicker on approving short sales (selling a house for less than is owed on it). There are many people who get fed up with the time it takes to get a short sale approved and they end up withdrawing their offer to purchase a short sale - I just had one withdraw that has been trying since JUNE to get a shortsale approved. A lot of times, they end up selling the same properties later on for $20, 30, even 40,000 LESS than the original offer that withdrew because of the time it takes! This costs banks even more losses and it could have been avoided! They keep saying that they have more requests for short sales than they do people to handle them, so they could fix 2 problems: HIRE SOME OF THE UNEMPLOYED PEOPLE AND TRAIN THEM!!!
3. They need to do more loan modifications for the current owners and this will also SAVE the banks money - instead of losing principle in a short sale scenario because an owner can no longer afford their payment, they will get paid the money but it may be at a lower rate or over an extended time. And they need to make the process less difficult - there are loan modification companies popping up daily and they charge the clients $995 upwards of $4,500 - I don't think this is how the government intended this process to work! Also, a modification needs to BENEFIT the client - I have had several calls from folks that were approved for modifications but their new payments were HIGHER! Banks are borrowing money at the Fed Fund Rate, which is like 0,5% so if they reduce the rate on the current owners to around 4% they are still making money and they can potentially get their entire principle back.
4. People need to understand that Hope For Homeowners, the latest program HUD has come up with to help people, is not working. HUD doesn't lend money; they insure loans and although they created this program, those entities that do lend money and securitize the loans are not willing to work with this program in its current form.
5. People CAN STILL GET FINANCED with credit scores under 700! The news media, and even Donald Trump on Greta Van Suystern keep saying you have to have 20% down and a 700 credit score. UNTRUE! We can still do 100% financing with 580 credit and 97% down to a 500 credit score to get people in a house they can afford and we verify that they can afford it! We are financing homes for people that end up costing them $100, $200, even $300 a month LESS than they are paying in rent but most people are afraid to even try because of everything they're hearing in the news. With the rates as low as they are and with the sales prices down so much, now is a great time for people to buy but the news media has them too afraid to try. The people who can qualify to buy homes are afraid to finance, afraid they don't qualify, afraid they don't have enough money for down payment and closing costs. The people who qualify are also afraid to buy, afraid that they will over pay, afraid that the bottom hasn't been reached, afraid they may lose their job.
6. Foreclosures should be slowed down tremendously - if the banks were to foreclose on all of the houses in which the owners are delinquent, they would end up losing so much money that they would either go bankrupt or need even more for a bailout! At that point, who would even want to bail them out when they have the opportunity NOW to assist in fixing a part of it. Sure, mortgages were given to people that probably shouldn't have been (at the government's insistence through the CRA, which, if you add a P to it is CRAP!) but you can't go back and change that fact now - we need to work with these owners to do everything we can to keep them in their houses to help our economy and to help their neighbors - if a house is foreclosed on, it affects the value of all of the houses in that particular neighborhood in a negative way! The problem with home values is that banks continue to foreclose and there aren't enough buyers to keep up with the supply.
7. The average person did not create this situation but they are the ones that will have to pay for it at some point in the future in the form of higher taxes to cover the money that was given for the bailouts. These are the people that need to be helped since these are the ones that will end up paying for the bailouts!

As long as nobody complains, the proposed income limits will go into effect on January, 20 for the USDA Rural Housing mortgage program. The tables below are for FLORIDA only; other states will have the increases, as well, but the amounts will vary. This is for 100% financing that also allows a buyer to finance their closing costs!

CURRENT TABLE

PROPOSED TABLE

For each person over 8-persons, add 8% of the 4-person limit.

NOTE: This is not an income increase for the 4-person and 8-person households. It simply removes the tiers for the 1-3 and 5-7 person households. It does have the effect similar to an income increase for those families in the 1-3 and 5-7 groups.

Reminder: These are NOT gross income limits. THE TOTAL ADULT HOUSEHOLD INCOME CAN BE MUCH HIGHER THAN THE "ADJUSTED" INCOME LIMITS IN THE TABLE. Deductions are allowed for: child care (12 yr old or less) to allow employment of the adult; $480/annual for each non-applicant under age 18; $480/annual for full time student over age 18; and $400 if anyone is elderly or handicapped. If the gross adult household income is less than the limit, you are good to go. If the income is over the limits, use the adjustments.

Contact me right away and let's get you or your clients into a new home by Christmas!!!!

Please read this and forward it to your database. My daughter

Wrote this. My son's dog is missing and we really

Want to find him - he's one of our family

And my son is heartbroken. There are several pictures

Here that can help you to recognize Dupree.

Also, please forward this

To your database and help us bring Dupree home. Thank

You SO much! ~~Sue

**Missing**

Dupree

A slat in our fence had broken and we didn't know it. Dupree got out yesterday, November 6, from our home between Memorial Parkway and Jet Drive in Fort Walton Beach and has been missing since. He didn't have his collar and tags on, but he is very friendly and up-to-date with shots. Dupree is my brother's dog, but a true part of our family. My poor brother is heartbroken. If you have ANY information on his whereabouts, please call 850-499-4467 or 850-499-2271 or 850-797-3196.

(Also, please feel free to repost this.)

Dupree playing with Joplin

Dupree with JJ

Dupree playing Twister

Please help find my brother's dog...