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Replies (9)
- Sherri Sherpy, "MN Mortgage Mom"
- Contributions:476
Seller paid closing costs are also being decreased to a max of 3%, being implemented in the summer.
- Chris Duncan, "OKCLENDER"
- Contributions:88
Well, let's see here, the government wants housing to recover and move inventory. Unemployment is at an all time high since the 80's, and foreclosures are staggeringly high as well. So, lets make an already stagnant industry slow down even more. People don't have that much money and now they are going to be required an additional 3% more. They stimulus to get buyers interested goes away right after, and oh yeah, the Fed will stop buying mortgage back securities and rates will possibly drive higher. Also, expect minimum credit scored to increase to 640 like the others that aleady have.
You cannot help make improvements when you price droves of buyers out of the market and cannot get buyers approved with such stringent guidelines.
Not good at all for the housing market.
GET READY!!!
You cannot help make improvements when you price droves of buyers out of the market and cannot get buyers approved with such stringent guidelines.
Not good at all for the housing market.
GET READY!!!
- Keane Ng, "Keane Ng"
- Contributions:297
I don't mind the increase in premiums. FHA represents a huge portion of the lending market today and they have to protect their assets.
The concessions change is a bigger deal. 3% is plenty for transactions over $300k but the smaller the loan, the more in concessions the buyer may need to be covered. I think 6% is excessive but 3% is pretty light for a $120k loan amount.
The concessions change is a bigger deal. 3% is plenty for transactions over $300k but the smaller the loan, the more in concessions the buyer may need to be covered. I think 6% is excessive but 3% is pretty light for a $120k loan amount.
- Michael Patterson, "Michael Patterson"
- Contributions:110
In reality the higher UFMIP fee won't be a deal breaker for borrowers since they can finance them in. I CAN see how lower seller concessions can be an issue. I agree that on lower priced homes it will potentially be an issue. The majority of the ones we see don't exceed 3%. In addition, exceeding the 3% tends to have the appraisal fall under slightly more scrutiny. Over all, changes are ok and won't affect us too much. The investors buying the loans are truly dictating more "guideline overlays" than HUD does now and we've already been bracing for tighter guidelines.
- Michael Bardy, "LendingPro"
- Contributions:25
From my perspective, the increase to 2.25% is a very small issue. I don't believe it will impact my business at all. Earlier in the year, the FHA's capital reserve dropped below the minimum amount as set forth in the legislation that created the FHA.
This is the response to that. The options for the decision makers were to increase the UFMIP fee to help shore up this figure OR cease operations. I am grateful that option A was selected.
If we lost FHA completely, that would be an issue. This is nothing more than a minor change in the details.
This is the response to that. The options for the decision makers were to increase the UFMIP fee to help shore up this figure OR cease operations. I am grateful that option A was selected.
If we lost FHA completely, that would be an issue. This is nothing more than a minor change in the details.
This is not good housing policy for our current economy, but it is cheaper than raising the monthly factor.
- Timothy Sutherland, "SunTrust"
- Contributions:619
it (HUD news release) also addresses that the monthly factor will probably rise also.
- Michael Patterson, "Michael Patterson"
- Contributions:110
I agree that compared to losing FHA loans entirely, it is a small burden to bear. However, I'd have to say that it's a little more than a minor change in my personal opinion. Streamline and standard refi's now go to 2.25% UFMIP as well. That's a pretty big hit and can be a hurdle to overcome for some borrowers, even if they do get a small prorated refund of their previous UFMIP fee. Many borrowers are only dropping their rate by a point or so and the higher closing costs that add to the financed amount can potentially wipe out enough of the ROI of a refi. Especially on lower sized loan amounts. It may not still make sense to refi. Combined with potentially higher rates later this year, I suspect that the streamline refi's volume may slow down a bit for HUD.
In addition, on a larger priced purchase in high cost areas, (see HUD's lookup tool) an extra .5% UFMIP fee is fairly substantial. In our area, a High Balance FHA Mortgage limit on a SFR is $567,500 so that would potentially add $2,837 to the financed amount of the loan. The extra $14-$15 per month isn't a huge deal, but $2,837 to closing costs can be in some people's minds. If I could save the $2,837 for my borrower by getting them to understand and beat the April 5th deadline woudn't I be the hero?
Now, spinning it to the positive, WHERE ELSE can a typical 620 fico score borrower (or less with some investors) get a 3.5% down payment (all gifted from a family member) and get into a home for next to nothing personally out of pocket? Other than VA or USDA this is the only game in town.
Now, just because one CAN get financing, doesn't mean they always SHOULD. That's a whole other conversation unto itself. Know this though... HUD and Fannie Mae/Freddie Mac have already started tracking stats down to the originator level on loan performance. They just aren't making it public yet. Very soon, originators themselves will be held to the same high standard that FHA approved Underwriters are. Too many defaulted loans and they could be blacklisted... yep, pick another career at that point. Again, I digress...
- Michael Patterson, "Michael Patterson"
- Contributions:110
On the positive side as well though... use this April 5th deadline to get borrowers off the fence, and talk to all of your realtor partners so they can also spread the news to their clients. Making sure the borrowers are getting their FHA Case Numbers prior to April 5th and saving that extra .5% UFMIP fee could be enough of a motivating factor.Do this, and you'll have a great pipeline of business this Spring!
HUD Changes Up Front Mortgage Insurance Premiums (UFMIP)
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- 4.9/5.0
- (2 reviews)
Contributions:110If you are considering an FHA loan, get your application in prior to April 5th. NOTE: If you put in an offer on a home and the deal falls through, you may have to be assigned a whole new Case Number. If this happens after April 5th, you would be required to pay the higher UFMIP.
The Mortgagee Letter was posted today and details the changes.
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