Shall-Ching Lu

This Mortgagee Letter provides notice of the 2009 comprehensive update to the Federal Housing Administration's (FHA) single-family mortgage limits as a result of the enactment of the Housing and Economic Recovery Act of 2008 (HERA). The mortgage limits described in this Mortgagee Letter are effective for those loans which have credit approval on or after

January 1, 2009, and apply to mortgages insured under the following Sections of the National Housing Act: Sections 203(b) (FHA's basic 1-4 family mortgage insurance program), 203(h) (mortgages for disaster victims), 203(k) (rehabilitation mortgage insurance) and 234(c) (condominium units). Instructions for FHA's Home Equity Conversion Mortgages (HECM) under Section 255 are set forth below.

Under the Housing and Economic Recovery Act (HERA) of 2008 passed in July 2008 (Section 1124), the Federal Housing Finance Agency (FHFA) was established and directed to set conforming loan limits each year for the nation as a whole, as well as for high-cost areas. The rules governing how the loan limits are established differ from the rules set forth in the Economic Stimulus Act of 2008 (ESA), which applies to loans originated in 2008. For example, under ESA, loan limits for high-cost areas were set at 125 percent of local house price medians and the maximum high-cost limit was 175 percent of the national conforming limit ($729,750 in the continental U.S.). See Mortgagee Letter 2008-06, dated March 6, 2008.

HERA stipulates that the national loan limit for one-unit homes in the continental United States shall be pegged to a house price index chosen by the FHFA. The national loan limit for 2009 will remain at $417,000. HERA provides that the mortgage limit for any given area shall be set at 115 percent of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area cannot exceed 150 percent of the Freddie Mac national loan limit, nor be lower than 65 percent of the Freddie Mac national loan limit for a residence of applicable size. Section 2112 of HERA further amends Section 203(b) of the National Housing Act to stipulate that the maximum principal loan obligation cannot exceed 100 percent of the appraised value of the property.

FHA's floor and ceiling loan limits for 2009 are set forth below based on the limits set forth in HERA. Interested parties may view FHFA's press release regarding 2009 loan limits for Freddie Mac and Fannie Mae at http://www.ofheo.gov/newsroom.aspx.

In areas where 115 percent of the median house price is less than 65 percent of the Freddie Mac limit, the FHA limits are set at the 65 percent amount, i.e., the "floor," as follows:

One-Unit $271,050

Two-Unit $347,000

Three-Unit $419,400

Four-Unit $521,250

Any area where the limits exceed the floor is known as a "high cost" area. In areas where 115 percent of the median house price exceeds the 150 percent figure, the mortgage limits are set at the 150 percent amount, i.e., the "ceiling," as follows:

One-Unit $625,500

Two-Unit $800,775

Three-Unit $967,950

Four-Unit $1,202,925

For all other areas, i.e., those where 115 percent of the median home price for the area is in between the floor and the ceiling, the limit shall be at 115 percent of the median home price.

The list of areas where the FHA mortgage limits are at the ceiling is provided in Attachment I. The list of areas where the FHA mortgage limits are in between the ceiling and the floor is provided in Attachment II. For any areas not listed in either Attachment I or II, the FHA mortgage limits are at the floor.

Learn about the NACA Mortgage

•· WHAT IS NACA?

•· WHAT ARE THE SERVICES NACA OFFERS?

•· WHAT IS NACA's BEST MORTGAGE IN AMERICA?

•v No Down Payment

•v No Closing Costs

•v No Perfect Credit (Credit Scores are not part of qualification)

•v 100% Financing

•v 1% below the conventional market rate

•v Every member receives the same interest rate

Visit our website www.naca.com

Send Email to ehardnett@naca.com to reserve seating

The first situation involves the listing side on bank owned property. Our agents have been asked to send our buyer's Earnest Money Deposit check to the listing agent who will contact escrow to open the transaction. The answer to this is a resounding "NO!" I'm not sure how large I might have to type that word for it to be remembered but I will repeat; when asked to do this your response is "NO!" As the buyer's agent, your Duty (you know which form this references) is to ensure delivery to escrow, not to anyone else.

The second situation is a "new" document that has just begun to circulate. This particular one was presented by Realty One Group, although I heard of at least one other company with a similar document. It is a notice concerning cooperating commissions. There are two reasons I will not sign this document. First, a typed (implying standard) commission of 3% is written into the paragraph. This is dangerously close to violating federal anti-trust regulations for price fixing. Second, this notice lumps short sales and bank-owned properties into the same category. THEY ARE NOT SIMILAR CIRCUMSTANCES. MLS has asked all members to adopt a spirit of cooperation concerning commissions offered with regard to short sales because the lien holder is not a party to the transaction and we don't know in advance what they will want in order to accept the short sale. When the bank is the owner, the listing agents (and broker) know what the bank will pay in commissions at the time of signing the listing agreement. The bank has signed a contract to that effect. Therefore, no notice of reduced commission for bank-owned property should be necessary. My first thought while reading this is that the MLS has repeatedly stated that all members agree commission will be paid on the gross sales price, not the net, and some agents think this document will absolve them of that responsibility. It will not.

Whether you are a first time home buyer or a seasoned home buyer, you will find the following guideline useful in planning your next home purchase. It is always a good idea to be prepared and know how you much to pay in advance especially when buying the biggest investment in life.

Below is a breakdown of all fees and what to expect when buying your next home.

Downpayment

Earnest Money Deposit - ranges from $1,000 to $2,000

minimum 3% of Purchase Price ($3,000 on a $100,000 home)

Buyer upfront fees

Inspection - $200

Appraisal - $350 HOC docs - $200 (bank-owned homes only)

Closing Cost - title fees (Negotiable w/Seller)

ALTA - residential - $500

Escrow - $350

Recording - $100

Title Inspection - $50

Document and Delivery - $50

Other fees - miscellaneous

Closing Cost - lender fees (Negotiable w/Seller)

2% of Purchase Price, around $2,000

Interest Rates and Monthly Payments 6.5% interest rate results in approximately $650 monthly payment on principle and interest Additional fees such as insurance and taxes must be considered. Insurance is around $250 annually and property tax is about 1% of the purchase price thus $1,000.

Call me at 702-212-2288 to discuss your options! You can also email me at homes@BigLifeEvent.com or visit my website at www.BigLifeEvent.com.