|Recently passed federal legislation has resulted in program changes at the Federal Housing Administration -- including revised ratios for refinances, enhanced alternatives on junior liens and required certification for FHA appraisers. Among other government lending activity is an FHA Webinar for community banks, testimony by mortgage bankers that FHA approval for mortgage brokers should be more rigid and a service that claims to enable non-FHA brokers to originate FHA loans.
Mortgagee Letter 2009-03 issued by the U.S. Department of Housing and Urban Development last week outlined requirements of the HOPE for Homeowners Program authorized under H.R. 3221, the Housing and Economic Recovery Act of 2008. The program, which has an annual 1.5 percent mortgage insurance premium, is available for loans closed prior to March 1, 2008, and includes a government interest in the property.
HUD noted that qualifying borrowers must have had minimum debt-to-income ratios of 31 percent on their old loans as of March 1, 2008, including taxes and insurance. However, DTIs for adjustable-rate mortgage borrowers can also be calculated based on the monthly payment and income as of the application date.
On the new H4H loan, front-end ratios are capped at 38 percent and back-end ratios are limited to 50 percent. Loan terms up to 40 years should be exactly 30 or 40 years if the loans will be included in Ginnie Mae mortgage-backed securities.
The maximum H4H loan-to-value is 90 percent, though 96.5 percent is available if the front-end DTI is no more than 31 percent under the new loan and the back-end ratio doesn't exceed 43 percent. Second liens of more than $2,500 can be satisfied with an up-front payment from the loan proceeds or an equity interest in the property.
Mortgagee Letter 2008-40 issued last month indicated that the recovery act eliminated state-specific maximum LTVs and capped most refinances at 97.75 percent LTV as of Jan. 1. The maximum LTV, including the up-front M.I.P., is 100 percent.
HUD noted in Mortgagee Letter 2008-41 issued in December that the FHASecure program has ended for loans assigned a case number after Dec. 31, 2008.
Another recent Mortgage Letter, number 2008-39, indicated the recovery act amended the National Housing Act to require that FHA appraisers are state-certified and adequately educated. HUD has already been rejecting applications from appraisers who are not state-certified and will require all appraisals on FHA loans as of Oct. 1, 2009, to be performed only by certified appraisers.
Mortgage Bankers Association President and Chief Executive Officer John A. Courson testified Friday before the House Financial Services Committee that FHA market share has risen from 3 percent 18 months ago to the current level of 20 percent. But he warned that bad players could jeopardize borrowers and damage the industry's reputation.
Courson called for an increase in the agency's staffing and technology resources. He also recommended a bonding requirement for mortgage brokers as well as increased net worth requirements.
Wolters Kluwer Financial Services announced yesterday an FHA Webinar for members of Independent Community Bankers of America. The 90-minute event starts at 11 a.m. Eastern Time tomorrow and costs $199.
The Mortgage Wave is marketing services that, it claims, enables mortgage brokers without FHA approval to close FHA loans. Brokers reportedly keep all of the yield-spread premium and commissions less a $995 flat fee.
"I am working with a few lenders to help brokers without FHA," the marketing message from The Mortgage Wave said. "We are one of the only companies offering this option."