Jeremy's Blog

Rates have finally reversed their upward trend, after a 1.5% increase since Memorial Day, we have now had 3 down days in a row!  Yeah baby!

With fears of inflation still lingering and the economy teetering, it's hard to say what will happen.  My best advice . . .  if you are closing in the next 20 days lock in!

We have been waiting on this mortgagee letter for over a year and it is finally here! We can now do Site Condos effective immediately without having to meet the Spot Approval process for FHA. Very exciting news indeed. Please take the time to read the mortgagee letter as it answers any questions you may have regarding this new process.

HUD Publishes Condominium Letter: ML 2009-19

HUD has published Mortgagee Letter 2009-19 implementing new condominium rules pursuant to the law enacted last July. Lenders will have two condominium approval options. They are: 1) HUD Review and 2) Direct Endorsement Lender Review. (Environmental reviews will not be required on projects processed by Direct Endorsement lenders). Permitting Direct Endorsement lenders to process condominium project approvals should greatly enhance the use of FHA financing for condominium projects when this proposal is fully implemented in October 2009.

Other important changes include: not requiring project approval for "site" condominiums; allowing projects that have as few as 2 units; termination of the "spot loan" process; imposing a limit that no more than 30% of the units in any project have FHA insurance; allowing manufactured housing condominiums.

The guidelines take effect for case number assigned on or after October 1^st with the following exception.

· Site condominium changes are effective immediately

Watch Video - Please Watch, Please Sign . . . .

Tax Credit Update

HUD has republished Mortgagee Letter 2009-15. The jist of it is that Buyers CAN NOT use the tax credit to meet the minimum downpayment requirements. HUD wants the buyers to have some "skin" in the game.

At quick glance, FHA has changed the letter by prohibiting FHA approved lenders and FHA approved nonprofits from using the tax credit to meet the 3.5% minimum downpayment requirement. While FHA approved lenders can "purchase" the tax credit, "the proceeds of the sale of the tax credit... may not be used to meet the 3.5% minimum downpayment requirement". The proceeds may be used for additional downpayment (above the minimum 3.5%), buying down the interest rate and closing costs. HUD also effectively capped the lender fee at 2.5% of the tax credit. In addition, HUD has added due diligence requirements for participating lenders.

The letter states:

"The homebuyer's downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs."