Gulf Coast Associates' Blog: Lending News

Yesterday, The Federal Housing Administration (FHA) announced several significant policy changes that are intended to help improve their increasing exposure to risk. Seems that rising defaults have hit the FHA's reserve funds hard; in fact, according to the Mortgage Bankers Association, 7.8% of FHA's loans were 90 days or more late or already in foreclosure at the end of the second quarter. While that's equal to the national average for other loan programs, it's up from 5.4% a year ago for FHA. In addition, the increased mortgage-based losses have pushed the agency to the point it is in danger of having its reserves fall below the 2% threshold mandated by Congress. Some officials believe it could happen before the end of this month. Options for the agency…

According to their annual loan closing costs survey, Bankrate.com had Florida ranked number two (tied with New York City) behind only Texas for being a high loan closing cost state. The new ranking was a step up for Florida after two years of being ranked in the number three position. So, while prices may be falling in Florida, home buyers will have to spend more to close on their new home purchases.

The study compared charges for loan origination fees, title and closing costs on a single family home purchase with a 20% down payment and a 30 year fixed rate mortgage of $200,000. It excluded taxes, other governmental fees and escrow fees. Nationwide, the average loan closing costs this year totaled $2,732, down from $3,118 in 2008.

This year's top ten…

Beginning August 15, FHA borrowers will be able to apply to reduce their monthly mortgage payments by seeking a loan modification through their current lender or loan servicer under the new FHA-Home Affordable Modification Program (FHA-HAMP). The Helping Families Save Their Homes Act of 2009 allows FHA to give qualified FHA-insured borrower's the opportunity to reduce their monthly mortgage payment by modifying the mortgage through the new program.

The program will permanently reduce a family's monthly mortgage payment through the use of a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage. FHA-HAMP will allow lenders to set aside up to 30% of the total principal balance until the house is sold or…

The Florida Homebuyer Opportunity Program (FL HOP) - created during the 2009 regular legislative session - is scheduled to have funds available ($30 million) by the first week of August, 2009. The FL HOP program will be administered through the State Housing Initiatives Partnership (SHIP) program; offices are located in all 67 counties and 53 Community Development Block Grant (CDBG) entitlement cities. Eligible FL HOP applicants can receive up to $8,000 in purchase assistance, which is expected to be repaid by the applicant upon receipt of his/her federal tax refund from their federal first time homebuyer tax credit established through the American Recovery and Reinvestment Act of 2009.

Highlights and Exceptions of the FL HOP program include:

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The federal regulator overseeing Fannie Mae's and Freddie Mac's Home Affordable Refinance Program announced today they are raising the program's loan-to-value (LTV) maximum from 105% to 125% to allow more homeowners to hopefully take advantage of today's lower mortgage interest rates. Homeowners must be current on their payments and the loan must already be owned or guaranteed by Fannie or Freddie. In addition, the program will allow borrowers who made original down payments of 20% or more to refinance without having to obtain mortgage insurance. Borrowers who were required to have mortgage insurance won't be required to obtain any additional coverage either.

Fannie Mae and Freddie Mac will also offer pricing incentives (a 0.5 percent reduction in its…

As you who visit the REW blogs on a regular basis already know, we try our best to keep you abreast of important changes in the lending industry when we can. To that end, I wanted to make a quick post and let you all know about the 2009 changes to the FHA and Conforming loan limits. We made a post about these changes at our Southwest Florida Blog - HUD Announces New Permanent FHA Mortgage Loan Limits, but I also wanted to give you folks the HUD links so you can look up the new FHA and Fannie/Freddie loan limit changes for your own individual counties.

To find your counties 2009 loan limits, visit https://entp.hud.gov/idapp/html/hicostlook.cfm. Just choose your state, enter your county name and select the appropriate loan limit type and the limit year…

In another effort to help homeowners who are facing foreclosure, the Federal Housing Finance Agency (FHFA) announced a new plan to help speed up the process for renegotiating delinquent loans held by Fannie Mae and Freddie Mac. The plan, which will go into effect on December 15, provides guidelines for mortgage servicers to follow in modifying existing loans to help prevent future defaults. FHFA officials hope their new approach will become a model for all loan servicing companies and make it easier for them to also bring help to thousands of affected homeowners.

According to the Mortgage Bankers Association, more than 4 million homeowners were either behind on their payments or somewhere along in the foreclosure process at the end of June. That's 9% of…

In a historic, yet widely anticipated, move yesterday Secretary Henry Paulson announced plans to put Fannie Mae and Freddie Mac under government custody. The unprecedented move by the Treasury includes replacing both company's CEOs, ending all stock dividends, and creating a new preferred stock that will be senior to all other outstanding shares.

The authority for such a move was granted to the U.S. Treasury in the recently passed Housing and Economic Recovery Act and was included in the bill to help protect the $5.4 trillion in outstanding mortgages the companies currently hold. Both Government Sponsored Entities (GSEs) have been under severe pressure over the last year. Their stock shares have fallen over 90% and the markets have had severe doubts about…