FHA extends waiver of anti-flipping regulations through 2012
WASHINGTON â€“ Jan. 2, 2012 â€“ In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting Federal Housing Administration Commissioner Carol J. Galante today extended a temporary waiver of FHAâ€™s anti-flipping regulations through 2012. Read FHAâ€™s anti-flipping waiver.
â€œThis extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,â€ said Galante. â€œFHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.â€
With certain exceptions, FHA rules prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, FHA temporarily waived this regulation through Jan. 31, 2011, and later extended that waiver through the remainder of 2011. The new extension will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties or properties resold through private sales. It will allow homes to resell as quickly as possible.
The extension is effective through Dec. 31, 2012, unless otherwise extended or withdrawn by FHA. All other terms of the existing waiver remain the same. The waiver contains strict conditions and guidelines to prevent predatory property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The waiver continues to be limited to sales meeting the following conditions:
â€¢ All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
â€¢ In cases where the sales price of the property is 20 percent or more above the sellerâ€™s acquisition cost, the waiver will apply only if the lender meets specific conditions and documents the justification for the increase in value.
â€¢ The waiver is limited to forward mortgages and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
FHA justified the extension by noting that professional flipping often takes less than 90 days, and making an investor wait deters buyers who must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant for about three months.
The complete wavier is published online in The Federal Register.
Â© 2012 Florida RealtorsÂ®
WASHINGTON â€“ Dec. 12, 2011 â€“ In many recent cases, new homes are being appraised for less than the cost of construction, according to the National Association of Home Builders. Builders are blaming flawed appraisals for holding back the housing marketâ€™s recovery, saying that new homes should not be compared to foreclosed homes that have sat vacant and are in disrepair.
â€œThe inappropriate use of distressed and foreclosed sales as comparables in determining new home values is needlessly driving down home prices, killing home sales, causing more workers to lose their jobs and delaying a housing and economic recovery,â€ says NAHB Chairman Bob Nielsen.
Sixty percent of builders say theyâ€™ve had problems with appraisals coming in below their contract sales price, according to a recent survey by NAHB. One out of three say theyâ€™ve had signed sales contracts canceled in the last six months because appraisals were less than the contract sales price.
In a separate study by the National Association of RealtorsÂ® from June, 16 percent of real estate professionals also reported an increase in deals being canceled mostly due to low appraisals.
â€œThis is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more homeowners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market,â€ Nielsen said in a statement.
NAHB is calling on regulators to make major reforms to appraisal practices and oversight to prevent flawed appraisals from continuing to hamper a housing market recovery.
Â© 2011 Florida RealtorsÂ®
Federal Foreclosure Program Information
The U.S. Treasury has released details of their program which will offer assistance to as many as 7 to 9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosures on families, communities and the national economy.
- The Obama Housing Plan
- Do I qualify for mortgage assistance?
WASHINGTON â€“ Aug. 1, 2011 â€“ If youâ€™re considering buying a home or planning to refinance, hereâ€™s some advice: Lock in a mortgage rate. Now.
Mortgage rates could shoot higher if lawmakers fail to reach an agreement to raise the debt ceiling by Tuesday, says Greg McBride, senior financial analyst for Bankrate.com.
But even if default is averted, thereâ€™s little downside to locking in a rate.
A government default would cause Treasury bond prices to plummet, and yields would rise. â€œUncle Samâ€™s borrowing rate is the baseline from which all consumer and business borrowing rates are determined,â€ McBride says. â€œIf Uncle Samâ€™s costs go up, borrowing costs go up for everybody.â€
And even if the default is short-lived, the ratings agencies have signaled theyâ€™ll downgrade U.S. debt. That would also drive up consumer rates, because the government would be forced to pay higher rates to bond investors.
â€œConsumers might look back on this period six months from now and regret it if they donâ€™t take action,â€ says Mona Marimow, senior vice president for LendingTree, a loan comparison website.
Mortgage rates are at historic lows and unlikely to go much lower. The average rate for a 30-year fixed-rate mortgage for the week ended July 28 was 4.55 percent, only slightly higher than a week earlier, according to Freddie Mac. Rates slipped on Friday after the Commerce Department reported that the economy grew at a lower-than-expected 1.3 percent in the second quarter.
Borrowers who want to lock in low rates need to act fast, says Keith Gumbinger, vice president of HSH, a publisher of mortgage data. â€œIf the government does default, itâ€™s going to be hard to lock in an interest rate,â€ he says.
How the debt-ceiling crisis could affect other consumer rates:
â€¢ Credit cards. Interest rates would likely rise, although not right away, McBride says. Credit card issuers are required to give you 45 days notice before they raise your interest rate.
Most credit card interest rates are tied to the prime rate, which wouldnâ€™t be affected by an increase in Treasury rates, he says. However, card issuers would likely increase the margin they add to the prime to calculate the rate they charge consumers, he says.
You can protect yourself from a rate hike by paying off your balance â€“ which makes sense even if the government doesnâ€™t default, McBride says. â€œI donâ€™t think thereâ€™s ever a good reason to keep a high credit card balance,â€ he says.
â€¢ Certificates of deposit. Savers who hope that higher Treasury rates will boost low CD rates will be disappointed, McBride says. Those rates wonâ€™t improve until banks increase lending, and thatâ€™s not going to happen if thereâ€™s a downgrade or default, he says. And if a default causes safety-seeking investors to flood banks with cash, McBride adds, rates could fall even more.
Reprinted with permission. Florida RealtorsÂ®. All rights reserved.
Â© Copyright 2011 USA TODAY, a division of Gannett Co. Inc., Sandra Block.
WASHINGTON â€“ July 27, 2011 â€“ A new program offers financial assistance to first-time homebuyers who are veterans or active-duty military members. The Pentagon Federal Credit Union Foundation, a nonprofit national organization, offers the program through its Dream Makers program.
Active duty personnel, veterans, retired members of the military and employees of the U.S. Department of Defense and the Department of Homeland Security may be eligible for a grant up to $5,000 to use toward downpayments and closing costs if buying their first home. The grants can be applied to a mortgage issued by any financial institution.
â€œMembers of the military often put off buying a home early in their careers because theyâ€™re moving around the country a lot,â€ says Kate Kohler, chief operating officer for the PenFed Foundation. â€œWe want to make sure they have resources to add immediate equity into their home when they decide to buy.â€
- Military affiliation â€“ (active duty, reserve, National Guard or veteran) â€“ a Department of Defense employee or a Department of Homeland Security employee.
- First-time homebuyer or not owned a home for the last three years; or a home has been lost through divorce or disaster.
- Gross household income, including allowances, used to qualify for a mortgage loan is a maximum of $55,000 per year, or 80% of a communityâ€™s median income based on family size.
To view eligibility requirements, visit www.pentagonfoundation.org/dreammakers.
Source: â€œVeterans and Active Duty Can Get Financial Help When Buying Their First Home,â€ Pentagon Federal Credit Union Foundation (July 25, 2011)
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Â NEW YORK â€“ July 18, 2011 â€“ The private market is ready to fill the void when conforming limits on government-backed mortgages at Fannie Mae, Freddie Mac, and the Federal Housing Administration expire at the end of September 2011, Federal Reserve Chairman Ben Bernanke told the House Financial Services Committee on Wednesday.
On Oct. 1, the maximum mortgage amount in high-cost areas is set to drop from $729,750 to $625,500.
â€œAs far as Fannie Mae and Freddie Mac are concerned, there is a tradeoff there between supporting the higher-priced homes and weaning the housing finance system off of unusual limits it was put under during the crisis,â€ Bernanke told the House committee. â€œI understand the private sector is taking at least a significant number of the jumbo mortgage market but at a higher cost.â€
The National Association of Home Builders has said that it fears more than 17 million homes nationwide will become ineligible for more affordable federal funding when the loan limit expires.
While Bernanke acknowledges that jumbo loans will likely come â€œat a higher cost,â€ he said that needs to be kept in perspective.
â€œMortgage rates on conforming loans are already near historic lows, hovering around 4.5 percent on the 30-year fixed,â€ he said.
Source: â€œBernanke: Private Sector Ready for Conforming Loan Limit Drop,â€ HousingWire (July 13, 2011) and â€œLower Mortgage Limits Are a â€˜Trade-Offâ€™ Bernanke Says,â€ CNBC (July 13, 2011)
Â© 2011 Florida RealtorsÂ®