| There has been a lot of talk about the Economic | | | | FHA says, due to the moratorium described in the next |
| Stimulus Act of 2008 that was recently passed. With | | | | section, a new, across-the-board, premium will go into |
| over 700 pages of documentation and continued | | | | effect on October 1, 2008, but has not yet announced |
| revisions, it can be difficult to see through the technical | | | | the level of the MIP. FHASecure mortgages will have a |
| aspect and get to the meat and potatoes of the Act. | | | | separate, higher MIP. |
| Here is some excellent information to help home | | | | Subject:Moratorium on risk-based premiums |
| buyers and agents understand what is happening and | | | | Changes: |
| what to expect down the road. Here is a current | | | | Temporarily keeps FHA from continuing risk-based |
| overview of the Act. | | | | MIPs |
| Subject: Conforming Loan Limit Changes: | | | | Description and Effective Date: |
| Permanently increases the limit and establishes a local | | | | Prohibits FHA from implementing a structure of |
| area-based system. | | | | risk-based mortgage insurance premiums beginning on |
| Description and Effective Date: | | | | October 1, 2008. FHA implemented a structure of FHA |
| The new limit will be based on 115 percent of the area | | | | risk-based mortgage insurance premiums on July 14, so |
| median home price, but in no case will the limit be more | | | | it will temporarily have to suspend its use. FHA has not |
| than 150 percent of $417,000, or $625,500, or less than | | | | yet set a date for the suspension and has not |
| $417,000. | | | | established an alternative premium structure. |
| Subject:FHA Loan Limit Changes: | | | | FHA has stated that a loan will be eligible for a |
| Increases the percentage for determining local area | | | | risk-based premium under Mortgagee Letter 2008-16 |
| loan limits; permanently increases the national cap and | | | | as long as the mortgagee receives a case number |
| floor. | | | | before October 1. |
| Description and Effective Date: | | | | Subject:Condominium Loans |
| The new limit will be based on 115 percent of the area | | | | Changes: |
| median home price, but in no case will the limit be more | | | | Moves virtually all singe family programs under the |
| than 150 percent of $417,000, or $625,500, or less than | | | | MMIF |
| 65 percent of $417,000, or $271,050. Will be effective | | | | Description and Effective Date: |
| upon the expiration of the Economic Stimulus Act of | | | | These changes authorize FHA to insure loans secured |
| 2008, which means the new limits apply to loans | | | | by condominiums under the Mutual Mortgage Insurance |
| endorsed for insurance on or after January 1, 2009. | | | | Fund (MMIF), which should enable FHA to streamline its |
| Subject:Borrower Cash Requirement Changes: | | | | condo project approval requirements. FHA says they |
| Increases the borrower's required contribution | | | | will issue regulatory guidance in 60 days, with an |
| Description and Effective Date: | | | | effective date of January 1, 2009. |
| Requires that the borrower pay 3.5 percent or more | | | | Subject:Treatment of Up-Front Premiums |
| of the appraised value of the property. | | | | Changes: |
| The borrower's contribution may be loaned by a family | | | | Limits total of loan and MIP |
| member, however, the principal obligation of the | | | | Description and Effective Date: |
| mortgage and the amount loaned may not exceed the | | | | Prohibits the maximum amount of the mortgage to be |
| appraised value. The family loan must be secured by a | | | | increased by the up-front mortgage insurance premium |
| subordinate lien. FHA says they will issue regulatory | | | | when the principal obligation equals 100 percent of the |
| guidance by October 1 but have not yet determined | | | | property value. |
| the effective date. FHA says this provision will not be | | | | Subject:Pilot Program for Automated Process for |
| effective before November 1, 2008. | | | | Borrowers Without Sufficient Credit History Changes: |
| Subject:Seller-Funded Down Payment Assistance | | | | Authorizes Pilot Program |
| Changes: | | | | Description and Effective Date: |
| Prohibits seller funding of down payment | | | | Requires HUD to develop an automated program to |
| Description and Effective Date: | | | | make FHA-insured mortgages available to borrowers |
| No party of interest can contribute any part of a | | | | who have insufficient credit histories to obtain credit |
| borrower's down payment either directly or through a | | | | using current underwriting criteria. This pilot is authorized |
| third party. | | | | for five years from date of enactment. |
| Applies to mortgages for which the mortgagee has | | | | Subject:Home Equity Conversion Mortgages |
| issued credit approval for the borrower on or after | | | | Changes: |
| October 1, 2008. | | | | Program Authority Expanded |
| Subject:Maximum Up-front Mortgage Insurance | | | | Description and Effective Date: |
| Premium (MIP) | | | | Authorizes FHA to insure HECMs for home purchase |
| Changes: | | | | transactions. |
| Increases Maximum Up-front MIP | | | | Ties the FHA's HECM limit nationally to the base |
| Description and Effective Date: | | | | conforming loan limit authorized by the Freddie Mac |
| Changes the statutory maximum up-front FHA | | | | Charter Act, which is currently $417,000. (Controversy |
| mortgage insurance premium from 2.25 to 3 percent | | | | has arisen over the new HECM limit - some are |
| (2.75 percent for first-time home buyers who receive | | | | arguing that it should be $625,500 nationally and others |
| HUD-approved counseling). This change does not, in | | | | are saying it is 115 percent of area median up to |
| and of itself, increase the MIP that FHA charges. It | | | | $625,500. FHA will make the determination shortly.) |
| gives FHA the authority to set premiums within a wider | | | | FHA says it will issue regulatory guidance in 60 days |
| range. | | | | that will be effective November 1, 2008. |