In the home loan department these days FHA seems to be the only game in town or at least that is what I am hearing from many of my members. I came across several tidbits on FHA today that I thought I would share…

The National Association of REALTORS ® President Charles McMillan sent a letter to US Department of Housing and Urban Development (HUD) Secretary Shaun Donovan requesting that FHA be permitted to utilize its authority and permit FHA financing that would effectively result in monetizing the federal tax credit currently available to first-time homebuyers. Monetizing the tax credit through a loan combined with FHA’s low 3.5 percent down payment requirement offers strong incentive to buyers who would otherwise not purchase a home this year. NAR estimates that hundreds of thousands of buyers will take advantage of the tax credit. During confirmation hearings, Mr. Donovan stated that FHA has the discretion to permit this type of financing mechanism. FHA regulations permit a borrower to use loan proceeds for a home purchase as long as the loan is “secured by property or collateral owned by the borrower independently of the mortgaged property.” Loans may be used for a down payment on FHA-insured mortgages, and secured by the mortgaged property, in certain circumstances. (source NAR)

The US Department of Housing and Urban Development announced that effective April 1, 2009, the loan-to-value (LTV) of any cash out refinance to be insured by FHA cannot exceed 85 percent of the appraised value of the home. As well, if new subordinate financing is offered by the mortgagee, the combined loan-to-value (CLTV) is limited to 85 percent. In Mortgagee Letter 2009-08, HUD states this temporary action is a result of the continuing deterioration of the housing market and the need to limit FHA’s exposure to the risk of this market. HUD specified underwriting and eligibility requirements to participate in a cash-out refinance. Borrowers living in the house less than 12 months are limited to a refinance amount that is the lesser of 85 percent of appraised value or 85 percent of the sale price when the property was acquired. A second appraisal is required on refinances that exceed $417,000. Delinquent borrowers are ineligible for a cash-out refinance. (source HUD Mortgagee Letter )

The National Association of REALTORS ® President Charles McMillan sent a letter to US Department of Housing and Urban Development (HUD) Secretary Shaun Donovan requesting that FHA accept paper copies of documents with electronic signatures as part of the case binder submission for mortgage insurance. While FHA does not currently accept this practice, the use of e-signatures for real estate documents is widely accepted by other financial and lending institutions. (source NAR)

FHA loans for Manufactured Homes: Effective October 20, 2008, the Manufactured Home Installation Program will be available to ensure that states have in place a minimum installation standard and an operating installation program. For states where HUD will administer the Manufactured Home Installation Program, HUD will ensure that trainers of installers planning to work in HUD-administered states are registered with HUD, and that persons planning to install homes in HUD-administered states are licensed by HUD. (source HUD)