FHA Loan Limits

FHA loan limits vary by county.  You may search FHA loan limits database found on HUD’s website:  https://entp.hud.gov/idapp/html/hicostlook.cfm.  We highly recommend you use a knowledgeable loan officer who will discuss your loan options and if FHA is one of those choices, makes you aware of the county loan limits before you submit an offer on a particular home.

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FHA Approved Condo List

Consumers may search the database for FHA approved condos at entp.hud.gov.  However, this should only be considered a starting place since approval guidelines have been tightening, and the database may not fully reflect these changes.  Current requirements include:

*Complex must be at least 51% owner occupied.
*No one entity can own more that 10% of the units.
*Only 50% or less of the units can have FHA insured loans (concentration).
*Less than 15% of the units can be in behind more than 30 days on association fees.
*HOA must carry specific insurance on the complex (see Letter B below)

For detailed information read the Mortgagee Letter 2009-46-A and  Mortgagee Letter 2009-46B .

When we represent clients buying condos with FHA loans, we’ve found the best way to make sure the condo complex is approved is not only to check the database but also to contact the HOA prior making an offer.  The HOA management company should be able to provide answers to these questions along with details regarding their insurance coverage.

**Some of these same requirements may apply when seeking conventional financing as well.

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Raising of FHA Guidelines for Spring 2010

HUD.gov

January 20, 2010 the Federal Housing Administration (FHA) announced the following changes coming this spring to FHA loans:

*Upfront mortgage insurance premium (MIP) raised from 1.75% to 2.25%
*Borrowers with FICO scores below 580 will have a required downpayment of at least 10%
*Allowable seller concessions lowered from 6% to 3% (seller concessions meaning the amount of closing costs the seller can pay on behalf of the buyer)

Commissioner David Stevens explained “Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important. When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”

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HUD Policy Helps Quicker Foreclosure Sales

Ann McKinley NMLS#200305, Network Funding

HUD has temporarily waived the rule on FHA loans that prohibits insuring mortgages on homes which the seller has owned less than 90 days.  Previously this requirement has both prevented the quick turn around of foreclosed property and limited buyer’s loan options when seeking affordable homes.  The current plan is for the waiver to be in effect for one year, however FHA may withdraw or extend at any time.  It does come with the following restrictions:

*Transactions must be arms-length.  No identity of interest between the buyer and seller.
*If the sales price is 20% or more above the seller’s acquistion cost, the lender must meet specific conditions for the waiver to apply.
*Waiver is limited to forward mortgages and cannot be used under the Home Equity Conversion Mortgage purchase program.

Read More: full text of waiver on HUD.gov

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New FHA Appraisal Rules

Revised federal guidelines require that all FHA appraisals done after April 1, 2009 provide:
1. The Market Conditions Addendum (Fannie Form 1004MC/Freddie Form 71).
2. At least 2 comparable sales within 90 days of appraisal date.
3. A minimum of 2 active listings or pending sales in addition to the 3 closed comparables.
4. Bracketed listings using both dwelling size and sales price when possible.
5. Adjust active listings to reflect the List To Sales Price Ratio.
6. Adjust pending sales to reflect contract sales price when possible.
7. Include original list price and any revised list prices.
8. Reconciliation of adjusted values of active or pending sales with adjusted values of closed comparable sales.
9. Absorption Rate Analysis.
10. Known or reported sales concessions on active and pending sales

FHA also is restating its warning that “Direct Endorsement Lenders are reminded that if the appraiser they selected provides a poor or fraudulent appraisal that leads FHA to insure a mortgage at an inflated amount, the lender is held responsible equally with the appraiser for the integrity, accuracy and thoroughness of an appraisal submitted to FHA.”

Since this will require additional work by appraisers, it is likely to lead to higher fees.

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New FHA Pre-Foreclosure Guidelines

On December 24th, 2008 HUD released the Mortgagee Letter 2008-43 detailing changes to come for FHA pre-foreclosures. Some of the significant changes include:

*Elimination of the eligibility requirement that the property appraise for at least 63% of what is owed.

*Increase in the required net proceeds. If the property is sold within 30 days, the net proceeds must be at least 88% of the appraised value, within 60 days the requirement drops to 86%, and thereafter the requirement is set at 84%. Prior to this mortgagee letter, the net proceeds had to be at least 82% of the property’s appraised value.

*FHA will now allow up to 1% in buyer’s closing costs.

*Up to $2,500 in Funds Available for Discharge of Subordinate Liens.

*Removal of repair limitation.

*Some exceptions to the non-owner occupant requirements.

For details, visit Mortgagee Letter 2008-43

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