FHA News : FHA Changes-An Active Start to the New Year

Written By: Stacey Sprain

So many changes happening so far in the New Year I thought it would be helpful to put them down in chronological order to help us all keep track! It’s looking like it will be a very active year for FHA program and guideline changes. Here is what we need to be aware of thus far:

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December 16

I mention this one only because with people being so busy over the holidays, wanted to make sure nobody missed it! Mortgagee Letter 2009-52 stated HUD’s FHA Short Sales and Short Payoff Policy effective 12/16/2009.

January 1

RESPA revisions are effective on and after this date for all loan types which as we are all now well aware brings forth a completely new way of reflecting loan fees, charges and revenues. Be sure to visit HUD’s RESPA page which provides a lot of great resources to answer the questions you may have regarding the new rules. Mortgagee Letter 2009-53 also added some last minute clarifications for FHA.

January 1

2010 FHA Maximum Loan Limits announced in Mortgagee Letter 2009-50 become effective for loans with credit approval dates on and after 01/01/2010.

January 1

FHA appraisals for ALL cases assigned on and after this date will be valid for 120 days which is a change from prior FHA appraisal validity periods of 180 days for existing construction and 12 months for proposed and under construction cases. This change is announced in Mortgagee Letter 2009-30.

January 1

Mortgagee Letter 2009-29 stated that effective for cases assigned on and after this date, Mortgagees are expected to complete requested case transfers as well as transfer valid appraisals that have been completed for the property to the requesting lender. The announcement expands to state that the receiving lender may request a 2nd FHA Appraisal in particular cases where material deficiencies are noted in the transferred appraisal, when the appraiser who completed the first appraisal is ineligible as per the receiving lender’s exclusionary list, or when lack of receipt of the first appraisal in a timely manner would have a negative affect on the borrower’s circumstances. Reason for obtaining a 2nd appraisal must be explained and documented in the case binder and copies of BOTH appraisals must be saved in the case binder.

Be sure to check out the FAQs re: Mortgagee Letter 2009-29 at HUD’s new Lenders Page!

January 21

Effective with Mortgagee Letter 2010-03, HUD will systematically review all Direct Endorsement (DE) underwriting mortgagees’ defaults (loans 90 or more days’ delinquent) and claim rates on loans during the initial 24 months from the date of the commencement of the amortization. HUD, at its option, will exercise its authority to terminate the underwriting authority (Authority) of DE mortgagees with excessive default and claim rates. The Department will be publishing a list of Mortgagees which have had their Authority terminated in the Federal Register and on HUD’s website starting February 1st.

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January 31

This is the last day that non-HUD approved condominium properties may be assigned FHA case numbers to be processed as spot loan approvals. Effective February 1, all condominium properties must be located in projects approved by HUD (HRAP) or by eligible lenders with full DE authority (DELRAP). Details on condominium project requirements and approval options can be found in Mortgagee Letter 2009-46B and Mortgagee Letter 2009-46A.

You’ll find HUD’s Condo FAQs athttp://www.hud.gov/offices/hsg/sfh/condo/faqs_condo.pdf.

February 1

HUD implements the most recently signed waiver of 90 day seller ownership requirements for FHA loans that meet the criteria described in the waiver athttp://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf. This waiver is effective for cases assigned 02/01/2010-02/01/2011 unless otherwise amended by HUD and applies to all re-sales; not exclusive to foreclosure properties.

February 15

HUD adopts a stance similar to that of HVCC in that for cases assigned on and after this date, Mortgagees are expected to have processes and procedures in place to certify appraiser independence. As per Mortgagee Letter 2009-28, the original effective date of these requirements was set for January 1st but HUD issued an extension for implementation of the rules until 02/15/2010. The big change for lenders is the following:
FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.

You’ll find a number of helpful resources on this topic at HUD’s newly organized Lender’s Page:http://portal.hud.gov/portal/page/portal/HUD/groups/lenders. There you can access a copy of the announcement of extension for implementation and FAQs regarding ML 2009-28.

February 15

HUD adopts the ability to re-certify property value by using Fannie Mae Form 1004D. The effective date
was originally slated for January 1 but was extended by HUD out to 02/15/2010. Details regarding the terms of use for FNMA 1004D are reflected in Mortgagee Letter 2009-51. Details regarding delayed implementation of the Mortgagee Letter content can be found athttp://www.hud.gov/offices/hsg/sfh/appr/delayed.cfm.

April 5

For cases assigned on and after this date, up-front mortgage insurance premiums change from the current structure to 2.25% for ALL standard FHA purchases and refinances. Details on the increase to MIP are reflected in Mortgagee Letter 2010-02.

In a press release issued on Wednesday, January 20th HUD also communicated the following which are expected to be formally released in the very near future:

- New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

- Interested party contributions will be limited to 3% which is a change to the current 6% allowance. This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

Need FHA Training? CLICK HERE: http://www.FHA-Classes.org

About The Author

Stacey Sprain - As an NAMP® staff writer, Ms. Stacey Sprain is currently a NAMP® member in good standing, and is a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution. If you would like to become a volunteer writer for us, please email us at: contact@mortgageprocessor.org.

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.