Appraisal management companies say their clients are prepared for changes to the appraisal process on loans insured by the Federal Housing Administration. Recent updates to FHA guidelines impact recently sold properties, mortgage insurance premiums and multifamily financing. In other FHA news, a growing New England lender touted its new Full Eagle designation.
A temporary change in policy by the U.S. Department of Housing and Urban Development allows borrowers to use FHA-insured loans to finance some properties owned less than 90 days, according to letter No. 10-011. FHA-insured loans can be used to purchase HUD-owned properties, bank-owned properties and properties resold through private sales.
HUD said it's hoping to stabilize home values and improve neighborhood conditions where foreclosure activity is high by speeding the resale of foreclosed properties. HUD Secretary Shaun Donovan said the temporary change has very strict conditions and guidelines to assure predatory practices are not allowed.
Under Donovan's watch, HUD will oversee the HOPE for Homeowners program, which has been extended to Sept. 30, 2011, according to a public filing. The program had been overseen by a board consisting of HUD, the U.S. Department of the Treasury, the Federal Deposit Insurance Corporation and the Federal Reserve Board. Now, the board will serve in an advisory capacity.
In addition to the transfer of authority, HUD also addressed comments concerning upfront and future appreciation payment percentages, loan-to-value and debt-to-income ratios, shared legal documents and endorsement time frames. HUD published revisions to the program requirements, including eligibility and underwriting guidelines.
An increase in up-front premiums for FHA mortgage insurance was declared by HUD starting April 5, according to Mortgagee Letter 2010-02. For purchase money mortgages and full-credit qualifying and streamline refinances, FHA is collecting an up-front mortgage insurance premium of 2.25 percent. For H4H loans and home-equity conversion mortgages, the up-front premium is 2 percent.
Some exceptions to the premium increase include loans closed under Title 1, Section 247 - Hawaiian Homelands; Section 248 - Indian Reservations; Section 223(e)- declining neighborhoods; and Section 238(c)- Military Impact areas in Georgia and New York.
For all FHA-approved multifamily mortgagees, HUD has extended the authority for processing pre-application firm invitation and firm commitment extension requests until June 26, HUD said in Mortgagee Letter 2010-01. Multifamily hub or program center directors have authority to grant an extension, up to 90 days, of the pre-application firm invitation letter and up to a 120 day extension of an issued firm commitment.
The department said the extension authority is necessary due to current market conditions. In addition, they said the new process is more cost efficient -- with just one review for up to 90 days instead of three 30-day reviews.
In other business, Freddie Mac announced in Bulletin No. 2010-2 a revision to its single-family seller-servicer guide. The update was due to recent modifications FHA has made to its condominium project eligibility requirements.
Effective Feb. 1, sellers may only use FHA condominium project approval to determine that mortgages secured by units in condo projects are eligible for sale to Freddie. The mortgage types involved include: FHA, VA, Section 502 Guaranteed Rural Housing Mortgages, and HUD Guaranteed Section 184 Native American Mortgages. Settlement dates must be on or before May 31.
Wolters Kluwer Financial Services announced it has updated its library of H4H mortgage documents and consumer education materials. The Minneapolis-based company said its compliance management services team is also offering training programs specific to H4H requirements.
And PriceMyLoan released a completed FHA TOTAL Scorecard loan approval platform. The Costa Mesa, Calif.-based technology firm said its automated underwriting and pricing engine now has direct access to FHA eligibility and credit scoring.
The Title/Appraisal Vendor Management Association -- whose members include appraisal management companies -- said in a statement today that its members are prepared to help lenders maintain compliance with FHA appraisal changes that went into effect on Feb. 15. The new requirements prohibit mortgage brokers from directly ordering FHA appraisals.
TAVMA Executive Director Jeff Schurman warned in the statement that he expects mortgage brokers, independent appraisers with strong business ties to brokers and Realtors to protest the change as they did with the Home Valuation Code of Conduct.
Coester Appraisal Group warned in a news release yesterday that many lenders are ill prepared for the FHA appraisal changes. The Gaithersburg, Md.-based appraisal management company claims its clients are prepared because it is already trained and ready for the changes. In addition, Coester has had "every FHA Roster appraiser signed up with us as well as offered training on our convertible appraisal product and FHA platform."
Total Mortgage Services LLC recently announced its approval as an FHA, non-supervised lender. The Milford, Conn.-based lender and broker said the Full-Eagle designation will help it increase this year's FHA mortgage volume as much as 20 percent.
Total reported in December that residential originations were expected to finish last year above $750 million -- well above 2008's $450 million.
And FHA lender Tropical Financial Credit Union launched through various social media channels to help keep members up-to-date on FHA loan programs. The Miramar, Fla.-based lender said it is utilizing Facebook, YouTube and Twitter.