Archive for Mortgage Guidelines
Mortgage Approvals Are Getting More And More Scarce
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The economy’s improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by.
Underwriting guidelines are tightening.
The data comes from the Federal Reserve’s quarterly survey to its member banks. The Fed asks senior bank loan officers around the country to report on “prime” residential mortgage guidelines over the most recent 3 months and whether they’ve tightened.
For the period October-December 2009:
- Roughly 1 in 4 banks said guidelines tightened
- Roughly 3 in 4 banks said guidelines were “basically unchanged”
Just 2 of 53 banks said its guidelines had loosened.
Combine the Fed’s survey with recent underwriting updates from the FHA and generally tougher standards for conventional loans and it’s clear that lenders are much more cautious about their loans than they were, say, in 2007.
Today’s San Jose home buyers and would-be refinancers face a bevy of new borrowing hurdles including:
- Higher minimum FICO scores
- Larger downpayment requirements for purchases
- Larger equity positions for refinances
- Lower debt-to-income ratios
So, if you’re on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later. It doesn’t necessarily matter that mortgage rates are low, or that there’s an up-to-$8,000 home purchase tax credit for households that qualify. With each passing quarter, fewer and fewer applicants are eligible to take advantage.
FHA Condo Approval Changes lead to longer Escrows
Posted by: | CommentsNew Rules for FHA Mortgage Loans used to purchase a condominium.
HUD has recently revamped their requirements for approval of Condominium Projects for FHA mortgages. Almost all condominium projects will need to obtain a new approval under the new HUD/FHA guidelines. Once approved, the approval will be good for subsequent transactions. Current estimates are that the approval process will take between three to four weeks.
NOTE: FHA financing requires that the project is approved in order to obtain the FHA Case number for the purchase loan And appraisal cannot be ordered until the loan transaction has received a FHA Case Number.
This means the following for the purchase of a condominium unit in a project that is not yet approved:
1. Plan for additional four weeks to the length of the escrow period.
2. Deadlines to remove Appraisal and Financing contingencies should be timed to allow for receipt of condo approval plus time necessary to order, delivery and review of the appraisal report.
Good News - Request for Approval of a Condo project can be started now ! Condo Owners, their Associations and agents can get a head start on this process NOW!
If you would like information on the application process, please contact me. I can forward some information on what is needed and where to send the application.
Remember, HUD is a government agency and they do not handle incomplete paperwork very well.
Only a complete package should be sent – including the HOA Cert.
At this time, HUD is not charging any fee for the Condo Project Approval. The only cost will be for the HOA Cert and whatever else the HOA charges you for the paperwork.
Please keep in mind that this is an entirely new process and we may receive changes to the process from HUD as time goes by. I will be sure to keep you updated.
Spring 2010 FHA Guidelines Make Borrowing Tougher And More Expensive
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Securing an FHA mortgage in California is about to get more expensive.
In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group’s portfolio risk while strengthening its overall financials.
For consumers, the changes mean higher costs.
As listed in the official announcement, there are 3 major guideline updates for the FHA:
- Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%
- Minimum downpayments for applicants with sub-580 FICOs are rising to 10 percent
- Seller concessions are being limited to 3%, down from today’s allowable 6%
Furthermore, the FHA has appealed to Congress to raise an FHA borrowers’ monthly mortgage insurance premiums.
To read the FHA’s statement, it’s clear what the group is trying to balance. On one side, the FHA wants to provide affordable financing to families that need it. That’s its mission statement. On the other side, though, the FHA must manage the risk that comes with insuring lesser-quality loans.
To that end, the FHA is stepping up its enforcement of “bad lenders” in hopes of stopping problems where they start.
Also in its new policies, the FHA is introducing a “termination clause”. If banks or loan officers that produce more than their fair share of bad loans, they lose their right to originate FHA mortgages.
As a result, homebuyers in Mountain View should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don’t want to do “bad loans”. Lenders are incented to turn down at-risk applicants and, already, we’re seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum.
Some have other guideline overlays, too.
The FHA’s new guidelines don’t go into effect until spring. So, between now and then, the old guidelines will apply. Therefore, if you know you’re going to need an FHA home loan in the next few months, consider moving up your time-frame.
If nothing else, you’ll save some money at closing.
Palo Alto Mom of three, FHA loan officer
