I received this today from my mortgage gal and thought I would share it with you.
Our House of Representatives have passed the FHA Modernization Act of 2007, s.2338, and now awaits a vote by the senate which is coming up. Some of the highlights of the legislation include:
- Increase limits to the same as conforming, $417,000.
- Eliminate or modify 3% downpayment. They are actually looking to lower to 1.5% down.
- Increase the loan term, adding a 40 year amortization option.
- Revise definition of "mortgage" to insure condominiums as a single family unit. Align to industry standards and make underwriting simpler.
- Upfront Mortgage Insurance Premium will be changed from 1.5% to an amount ranging from .75% to 2.25%. This risk based pricing of the premium will be based on credit score, the amount of the downpayment, and source of downpayment.
What this means to your buyers:
- Fannie Mae and Freddie Mac have now implemented risk based pricing based on credit scores. On all conforming loans where there is less than 30% downpayment and the credit score is less than 679, borrowers will be assessed an adjustment that will affect their rate. Increasing the limits to $417,000 will make FHA way more attractive to buyers whose credit scores are average because FHA rates have usually been better than conforming rates. Buyers with average scores will be able to have a cheaper house payment than conforming and/or qualify to buy a little more house than with the conforming.
- Changing the minimum cash investment to 1.5% from 3% will allow more low to moderate income buyers into a home who cannot qualify for the 100% financing programs and cannot save larger down payments.
- Changing the Up Front Mortgage Insurance Premium will do two things: A) Those with great credit will be rewarded with a lower premium. B) Those who are credit challenged may now qualify for a home loan, but will have to pay higher risk based premium which is always financed in to the end loan. This is a much better solution than sub-prime adjustable rate mortgages and will fix them into a 30 year fixed rate note at a good rate. This will allow them a better chance of success in making their payment each month.
What this means to you: 1) This legislation will allow more buyers to qualify for home loans which will allow you to sell more homes. 2) This should improve sales and purchases in homes priced from $210,000-$423,000. 3) It will allow more borrowers to qualify for Condo and townhome purchases.
Please send an e-mail to your senators in the next 7 days to encourage them to vote FOR the "Expanding American Homeownership Act" known as the "FHA Modernization Act, s.2338."
Missouri: Senator Bond can be reached at bond.senate.gov/contact/contactme.cfm
Senator McCaskill can be reached at mccaskill.senate.gov/contact.cfm
Kansas: Senator Brownback can be reached at brownback.senate.gov/CMEmailMe.cfm
Senator Roberts can be reached at roberts.senate.gov/public/index,cfm?FuseAction=contactinformation.EmailPat
Or, go directly to https://email.reeceandnichols.com/exchweb/bin/redir.asp?URL=http://www.senate.gov/ and click on to "Senators" at the top. You can e-mail your message directly to them from this sight.
Please take the time to do this. It will benefit our business tremendously, during a time in which we all know is challenging. Also, please share with your real estate partners and offices.
Carol Poppe,
VP/Mortgage Lending
10740 Nall Avenue
· Suite 210 • Overland Park, KS 66211
Office: 913.652.7302 • Fax: 913.649.3222
Cell: 913.707.1153
www.fcbankonline.com
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Fran, our V.P. of Secondary just made us aware of the changes that Fannie Mae and Freddie Mac are going to be making the end of next week and they are not good. But at least FHA seems to be moving in a positive direction and all of the ones that I have heard do far would be a welcomed change.