Three Important FHA changes due October 1, 2009

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

In last week’s article, I provided information concerning HUD’s new requirements for FHA Roster Appraisers that become effective October 1, 2009 as per Mortgagee Letter 2008-39. There are two other major issues of concern to all of us FHA originators and processors that are slated for October 1, 2009 as well.

HUD’s Mortgagee Letter 2009-19 was issued back in June relaying major changes to the process of condominium project review and warranty. Most importantly, that announcement communicated the complete removal of FHA spot loan condominium financing effective fort cases assigned on and after October 1st. Well, the good news is that I have “heard through the grapevine” that HUD will be putting this off and revising the details that were given in ML 2009-19 to push back the effective date until November. The bad news is that the details of changes aren’t yet clear so it puts us all on alert with no choice but to monitor HUD’s Mortgagee Letter website to watch for the posting of the bulletin.

I did just notice something HUD has apparently changed out on the web in the past couple of days though. Last time I visited the condominium search site at https://entp.hud.gov/idapp/html/condlook.cfm (which was within the past few days) I noticed they’d already updated and created a dropdown box for lenders to select whether a project was approved by HUD (HRAP) or by lender (DELRAP) and now I see that dropdown box content has been revised to give two different choices – the HRAP/DELRAP has been grouped together as one dropdown choice with Pre-HRAP/DELRAP given as the second dropdown choice. What this could mean is a mystery to me but I’ve got my “eyes in the sky” as they say. I’m watching all my trigger sites to try and get some clues as to what the anticipated Mortgagee Letter revision might tell us. I would expect it should be posted any day now because something is definitely up!

I’ve also been watching for HUD communication or announcement on another topic that I would expect should be announced any day now. As you may recall, we’ve been working under a moratorium on risk-based mortgage insurance premiums due to provisions implemented by HERA (Housing and Economic Recovery Act of 2008).

That moratorium was announced in HUD’s Mortgagee Letter 2008-22 which communicated a one year moratorium on the risk-based insurance premiums that were originally announced in Mortgagee Letter 2008-16. The one year moratorium is set to expire on September 30th. It is FHA’s intent to make any subsequent changes to the premium schedule only on an annual basis and make them effective at the beginning of the fiscal year.

FHA’s fiscal year begins October 1 and ends September 30. So, whether or not there will be any changes to the current mortgage insurance premium structure remains to be seen. To be honest, I don’t expect HUD to revert back to the risk-based premiums because they caused a LOT of confusion, processing and underwriting errors, insuring issues and created a nightmare in the industry. It was problematic basing the premiums on qualifying fico scores and LTVS and left too much room for error. The current premium structure is much more user-friendly and I would imagine allows much more efficiency for all across the board.

One thing is for certain; we are all watching and waiting with great anticipation for HUD’s expected communications in the coming two weeks on these topics because they will have a major affect and potential impact on how we’ve been doing business to date. As soon as I know, I will pass on what I learn.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)