FHA 90 Day Flip Rule: Different By Lender is a post from: Arizona Mortgage Team

One of the crazy things I have seen lately is the number of different answers I get from different lenders about whether or not they can loan money to someone using an FHA loan if the property the person is buying has been bought by the previous owner recently.

And here in Arizona, this is somewhat of a hot topic as investors buy a home, possibly (but not always) fix the home up and then flip it for a profit.

And here is the crazy part: supposedly FHA gave their opinion on this topic and there are still three possibilities that you might hear from lenders as to whether or not they will loan you money on an FHA loan:

#1: Some lenders will not lend money on an FHA loan if the house has been bought by the current owner within the last 90 days.

#2: Some lenders will lend money on an FHA loan if the house has been bought by the current owner within the last 90 days as long as the new sales price is less than 120% of what the current owner bought it for.

#3: Some lenders will lend money on an FHA loan if the house has been bought by the current owner within the last 90 days regardless of what the new sales price is.

Obviously, the scramble is to find a lender who will do #3 — and look no further than Academy Mortgage.

And as a bonus, you can get your loan closed in 10 days if needed – which helps if you have run into this problem and another lender has told you either #1 or #2 and you have a tight deadline.

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FHA 90 Day Flip Rules With More Than 20% Increase In Price is a post from: Arizona Mortgage Team

It is now possible to flip a property for more than 20% and get an FHA loan on the home.

Academy Mortgage is now offering financing on properties with a 90-day flip that have an increase in the sales price of 20% or more for FHA loans.

But these loans must be underwritten by certain underwriters at Academy – one of them sits right down the hall from me.

Below is a list of requirements that must be met in order to finance these properties.  These guidelines are in addition to the existing FHA less than 90 day flip guidelines already in effect.  This product will be available beginning 3/12/10.

FHA Flip >20% value increase from last sales price.

• Maximum DTI is 50%, regardless of AUS Findings.
• Minimum Fico for all Borrowers is 660.
• Owner Occupied only.
• Two (2) Appraisals must be ordered in compliance with HVCC guidelines. One of the appraisals must be ordered from RELS Evaluation.
• An AVM is required and can be ordered through any industry accepted AVM product including Interthinx/Fraudguard.
• Any concerns or inconsistencies regarding support of property value must be fully satisfied.  If the underwriter is unable to satisfy their concerns or inconsistencies pertaining to value, the loan will be declined.
• Property Inspections must be ordered and any issues resulting in health, safety, marketability or structural deficiencies must be cured prior to closing.

Are you running into problems with getting your flipped property approved?

Contact one of our experts.

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Video About FHA Flip Rule is a post from: Arizona Mortgage Team

Here is a video about the FHA flip rule – hat tip to Mark Madsen at MyFHAMortgageBlog for letting me know about it.

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FHA Relaxes the Anti-Flip Policy for One Year is a post from: Arizona Mortgage Team

For anyone who has bought a home with the intention of flipping for profit…. or would-be FHA home buyer that has fallen in love with a property that is being flipped by an investor, you know well that the FHA anti-flipping rule has caused some grief for you.

Up until now, if you were a buyer, that was obtaining FHA financing to purchase a home, you wouldn’t be able to make an offer on a property that was being sold by an investor (flipper), unless that investor had owned the property for at least 90 days.

If you were that investor that recently acquired a property, and turned around to list it for sale, you only had two types of buyers that you could market to: Conventional financed buyers and cash buyers.

Unfortunately, most property flipping happens within the price range of the FHA home buyer, and with FHA accounting for more than 60% of financing transactions in many markets, there was headaches for both sides.

This has changed.

For all purchase contracts dated after February 1st, 2010, FHA has waived the flipping rule.  Private Sellers and Investors can now sell their properties to FHA buyers without having to wait 90 days.  There are a few rules to keep in mind, but believe me, these are fair and this is good news.

• The transaction must be Arms-Length.  There cannot be an identity of interest between the buyer, seller, or any other parties participating in the transaction.
• In cases where the sales price is 20% or greater than the seller’s acquisition, the lender must justify the increase in value with supporting documentation of renovation, repair and rehabilitation work.
• If no such work was performed the appraiser must provide an appropriate explanation of the increase in property value since the prior title transfer.
• The lender must order a property inspection and provide that report to the home buyer. Buyer’s may be charged for the cost of this inspection.

This is brand new and developing, so we wanted to make sure that you got the good news before you started your weekend.  If you have any questions regarding this, or anything else, please feel free to contact me.

More details from HUD

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Short Sale Guidelines: FHA hands down it’s verdict on Short Sales is a post from: Arizona Mortgage Team

There are a lot of schools of thought but just last week, FHA finally laid out it’s decision on how they will determine if a homeowner is eligible for FHA financing after a short sale.  As I have said before, there are probably 10% of lenders that will do this, the other 90% will not.  Keep you eyes open as the lending industry is about to get more strict.  My guess is that the 10% will likely cease to exist.

You should be careful to imply that this is somehow set in stone.  There are way too many variables to risk ourselves in implying that our client “IS” going to get into a home in 2-3 years.

This mortgagee letter provides guidance to lenders and underwriters regarding borrower eligibility when:

• a previously owned property was sold for less than what was owed (short sale), or
• there is principal write down of indebtedness that cannot be refinanced into a new mortgage (short pay off).

Summary – FHA Guidance on Short Sales

Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to:

• take advantage of declining market conditions, and
• purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.

Borrowers are considered eligible for a new FHA-insured mortgage if

• they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, &
• the proceeds from the short sale serve as payment in full.

Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances.

However, I want to make a very important point.  As much as this may sound exciting, please be careful what you say or read. 

This is what you need to consider:

• The fact is, lenders are known to impose layers of restrictions on top of current guidelines.  Just because FHA says so doesn’t mean the lender will lend the money.  In fact many lenders will not.
• How many people do you know who’s credit is actually in good shape before or during a short sale?  See what I mean?

On conventioanl financing the rule is generally 2 years after a short sale,  however:

• there are probably 10% of lenders that are doing it.  The other 90% will not.
• It may also vary upon whether it is a Short Sale with no default in payment history
• or, whether it is a pre-foreclosure that will likely reflect on the credit history
• It will also depend whether the payoff at the time of settlement reflects the deficiency or it does not.
• If there are no lates prior to the short sale and the agreed upon payoff does not reflect the deficiency thus not reflecting on the HUD, then it is likely a good possibility that the client can get the loan in a period of 2 years. If there are lates in the history, then it becomes pretty clear it is a pre-foreclosure and they are very unlikely to get the loan (Must wait for 3-4 years or until the credit permits).

By Ted Canto, Sr. Mortgage Consultant , Academy Mortgage

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FHA Downpayment, FHA Insurance Costs To Rise? is a post from: Arizona Mortgage Team

Is it about to get tougher to get an FHA loan?

It is according to the Chicago Tribune.

According to a story that ran today, look for FHA insurance (UFMIP and/or Monthly MI) and down payment requirements to rise for FHA loans soon.

Among the steps scheduled to be outlined today are greater down payment requirements and higher credit scores for consumers who seek FHA-backed mortgages.

Few specifics of the plan, designed to limit risks to the FHA’s loan portfolio, are expected to be divulged immediately. But it seems clear from testimony that Housing and Urban Development Secretary Shaun Donovan will give later today that home buyers are going to have to dig deeper in their wallets to purchase a home.

“We have made the decision to exercise our authority to increase the up-front cash that a borrower has to bring to the table in an FHA-backed loan – to make sure that FHA borrowers have more “skin in the game” and a stronger equity position in their loans,” Donovan said in prepared testimony that will be given Wednesday afternoon to the House Committee on Financial Services. A copy of Donovan’s testimony was released Wednesday.

Donovan said he plans to provide more detail on the changes next month.

Currently, borrowers are required to have a 3.5 percent cash down payment.

While the FHA plans to increase minimum credit scores “for the time being,” it also is studying whether such an increase should be combined with other changes in underwriting requirements.

The agency also plans to seek permission from Congress to raise the annual mortgage insurance premiums.

One specific that Donovan is expected to offer is that sellers will be able to help buyers with only 3 percent, rather than the current 6 percent, of associated closing costs.

Regardless of what the details are that will “soon be announced” – one thing is clear:

It is about to get tougher to get an FHA loan.

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640 Is The New 580 is a post from: Arizona Mortgage Team

For many years, if you wanted to get an FHA loan, you didn’t actually have to have a “minimum” credit score – but about 2 years ago, that changed when lenders started requiring a minimum credit score. When lenders first started requiring minimum credit scores, the first minimum credit score they used (or most of them used anyway) was 580.

Then over time it moved to 620.

And now I am seeing many lenders move their minimum credit score requirement to 640 for FHA loans.

Which means that your mid credit score needs to be above 640 for many lenders to be able to help you get an FHA loan. Not all lenders are requiring a 640 yet – but if history is any indication, they will all soon be requiring a 640 mid credit score before they will loan you money.

Yes, guidelines are still getting tighter – and I don’t see the tightening trend reversing direction anytime in the near future.

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FHA Mortgages: Changes Coming? is a post from: Arizona Mortgage Team

We are in uncharted waters when it comes to FHA financing – and in my experience, uncharted waters means anything can happen.

But you may have heard that recently the FHA insurance fund has dropped below the Congressionally mandated 2% and there is a lot of discussion about whether or not FHA is going to need a bailout.

Will FHA need a bailout?

I don’t have enough information to know for sure – so I won’t even take the time to speculate. The only thing that is really clear to me is that there are probably quite a few people who work at HUD burning the midnight oil trying to come up with some possible solutions to the problem of FHA being under-capitalized.

Which means I suspect more changes are coming to the FHA financing programs – and I will give you a hint — I suspect that none of them will make it any easier to get an FHA loan.

The LA Times did a nice job of outlining just a few possibilities:

* Higher down payments. FHA’s current minimum cash down payment is 3.5%. On a $200,000 house, a buyer can bring just $7,000 to the table, aside from closing costs.

* Higher mortgage insurance premiums. FHA charges an upfront mortgage insurance premium of 1.75% of the loan amount. Most borrowers roll that into their loan and finance it. The FHA also charges an annual premium, paid in monthly installments, of either 0.5% or 0.55%, depending on the down payment. To rebuild reserves, FHA could tweak one or both premiums to yield higher revenue. It could raise the upfront premium as high as the statutory maximum of 2.25%. It could also raise the annual fee, but the total premium could not exceed 3% under current congressional limits.

* Cutting home-seller “concessions” to borrowers’ loan costs. One of the big attractions of FHA financing has been the agency’s liberal allowance for seller contributions to borrowers to offset settlement and loan-related fees. The current FHA limit is 6% of the house price, which critics believe to be excessive. They say the policy allows financially marginal borrowers to buy houses they shouldn’t, raising FHA’s exposure to losses. Pinto wants Congress to order FHA to reduce maximum concessions to 2%.

* Toughening credit standards. In the mortgage market, FHA is by far the most lenient and flexible player when it comes to evaluating applicants’ creditworthiness. It does not have a minimum credit score, though it permits lenders to impose their own FICO score minimums. FHA also has been far more tolerant of credit history peccadilloes than Fannie Mae or Freddie Mac.

Is the day coming where you will need to have a 10% down payment in order to qualify for an FHA mortgage?

I don’t know.

We are in uncharted waters.

Which means anything is possible.

For example: did you know that many lenders now require a mid-credit score of 640 for an FHA loan?

Stay tuned, more changes coming.

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Tempe Town Place Condos – Tempe AZ Condos For Sale is a post from: Arizona Mortgage Team

Are you searching for Tempe AZ Condos For Sale? If so, you should talk to Dean Ouellette. Dean is a RE/MAX agent who specializes in Tempe Town Place Condos and other Tempe AZ based condominiums for sale in Tempe and Phoenix Arizona locations.

See all Tempe Town Place Condos For Sale

Dean suggests, the Tempe Luxury condo market and Phoenix luxury condo market over the last few years have been hit especially hard. Both condo markets have been slower to recover than the single family residential market. The primary reason for the slow recovery time is due in most part from the fact that most of the sellers owe more on their mortgage than the condos are worth. This means that most Tempe and Phoenix condos for sale must be sold through a short sale process. To protect yourself in this market it is imperative to work with an agent who specializes in short sale and foreclosure transactions.

Dean Ouellette spends a tremendous amount of time studying and working in the Tempe and Phoenix condo markets. He has the knowledge to help you buy or sell your condo in this challenging market. If you are looking to sell your Tempe condo and need someone who has successfully dealt with condo short sales or you are looking to purchase a condo foreclosure Dean can help.

Want to be featured like this? Contact us.

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FHA 203k Streamline: How Much Money Can You Get? is a post from: Arizona Mortgage Team

The FHA 203k streamline program was designed for people who are interested in buying a home that is in need of a few repairs that are not “structural” and would require major work. The FHA 203k program is designed for homes in need of major work, the FHA 203k Streamline is just designed for work like carpet, paint, kitchen, gutters, etc.

Here are the most common FHA 203k Streamline repairs.

So how much money can you get for repairs with the FHA 203k Streamline program? A total of $35,000.

Total.

Now, at first glance, that might seem like you can spend $35,000 on contractor labor and supplies – but that isn’t so. That $35,000 includes bank fees.

FHA 203k Rehab Cost Must Include ALL Of The Following AND Can’t Exceed $35,000:

• Cost of the construction supplies
• Cost of the labor of the contractor
• 10% contingency fee
• $100 final inspection fee
• Up to 1.5% supplemental origination fee

If you add all of these together, you will get a number that says that the total cost of materials and labor can’t exceed $31,257.

So make sure that when you budget for the FHA 203k Streamline program, you know that $35,000 isn’t really $35,000 – it is really $31,257 after you subtract all of the fees.

Which is kind of the way everything seems to be. A fee here, a fee there… yeah, we have a fee for that.

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