Scott Strang

This is some very important information in this link. One of activerain's members is David Stevens, Assistant Secretary of Housing - FHA Commissioner, has posted the following blog for our review. This is the most current and accurate information available regarding new changes in the FHA.

http://activerain.com/blogsview/1450362/changes-at-fha

What does all this mean? This coupled with the fed not buying mortgaged backed securities (http://online.wsj.com/article/SB126291088200220743.html) as of March 1st leading to a 1% rate increase in addition to a tax credit expiring April 30th means there has not been a better time to buy.

What changes will be implemented? (announced the following on January 20):

1. Increase the up-front mortgage insurance premium (MIP) to 2.25%;Simply put, more money upfront to buyer, previously 1.5%. In some cases upfront MIP can be a part of the loan if seller concession is made see line #3. This will go into effect in the spring.
   
2. Update credit score and down payment requirements for new borrowers;580 and above ok, less than that will need 10% down or greater. This will go into effect early summer.
   
3. Reduce seller concessions to three percent, from six percent. 250k purchase you could get up to a 15k concession including upfront mortgage insurance and all other closing fees. That is now reduced to $7500 so with the example above it leaves you 1875 for other closing cost and pre paids. With the guideline's a 3% seller concession of 3% will not cover all closing cost. The borrower will have to bring some money to closing for closing costs. This goes into effect early summer.
   
4. Implement a series of significant measures aimed at increasing lender enforcement. Lender held liable and responsible for loans the originate and underwrite. Effective immediately
   

This credit is NOW expanded to move up / move down buyers. This is a great opportunity for "empty nesters" that have lived in their home for over 5+ years and now want to get into that 55+ condo. The beauty of the credit is it can be for a used home of greater vale or lesser value.

The tax credit still applies to first time buyers, however they have opened up the income restrictions from 75k and individual to 125k as an individual, married up to 225K. Read below for more details. I am excited about this as it is crucial to housing recovery which in turn stimulates a large segment of our entire US economy.

Low rates+ low prices + tax credits =great time to buy.

********Article below is from the National Association of Realtors. ******

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
  
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by tow additional factors:

1. The price of the home.
2. The buyer's income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale

Financing Alert! FHA Tightening Policies

Buyers May Not Qualify after January, 2010 ? Credit Scores Increased to 693

The Federal Housing Administration will tighten credit standards and implement new rules for appraisals on Jan. 1, saying a study to be published in November is expected to show FHA's capital reserve ratio slipping below mandated minimums.

FHA's insurance fund is sufficient to cover future losses, Federal Housing Commissioner David H. Stevens said, but the tighter policies will ensure that the loan guarantees remain self-sustaining and continue to be funded by premiums paid by borrowers, not taxpayers. The new policies also include guidelines for ordering appraisals that are intended to protect appraisers from pressure by lenders.

FHA is also placing new requirements on streamlined refinancing, payment history, income verification, and demonstration of net tangible benefit to the borrower. Borrowers must have made at least six months of payments in order to qualify under the new requirements, for example.

All in all, the tighter credit policies, along with an increase in average FHA credit scores over the last year from 633 to 693, will help reduce losses, ensuring that claims on FHA loans don't exceed premiums paid by borrowers, HUD said.

The U.S. House of Representatives this week passed legislation intended to help FHA combat fraud and lax underwriting by hiring additional staff and upgrading its technology. The bill was a response to fears that increased demand for FHA-backed loans is taxing the FHA's capabilities to oversee lenders, making the program more vulnerable to losses.

What does this mean for potential borrowers? It means that there is no better time than the present to buy a home. This particularly applies to 3.5% down borrowers. Historically low rates, low prices and lots on inventory. It's a no brain-er !!

Tired of you house not selling?? Sick of your agent ??? Don't want to deal with costly moving expenses?? There is now another option. Just torch your house and leave.

I am making light of this but this is an actual story that happened with this 1.45 million home in Newbury MA. Sad but true:

http://www1.whdh.com/news/articles/local/BO124140/

http://www.newburyportnews.com/punews/local_story_253231058.html

"She was sick of the house quote, unquote, and she left the house to burn," said Maura Bailey, Assistant District Attorney.

"Ms. Moore told officers she had burned it down," prosecutor Maura Bailey told Doyle yesterday. "She said she was 'sick of the house' and wanted to 'let it burn.'"

The house was on the market for 1065 days. It started at 2.5 million and was down to 1.45 million before it was torched.