Very Important Updates-More News on Mortgages and Lending | Phoenix Real Estate
August 20th, 2008 categories: Mortgage and Lending, Real Estate News
I get some really great updates from Amy Swaney, Vice President of Artisan Mortgage and with her permission of I am posting this information I received in an email from her today.
It is good information if you are planning to purchase a home in the the Phoenix area, especially if you are purchasing a second home or if you are depending on any Down Payment Assistance Program such as Ameridream or Nehemiah.
Seller-Funded Down Payment Assistance Coming to an End
In response to recently passed legislation, FHA is eliminating the use of Seller-Funded Down Payment Assistance (DPA) programs. As a result of this change, most lenders have already eliminated or notified their customers of the proposed elimination of the ability to purchase these loans as of the end of August. Loans that have been locked, MUST close by their lock expiration and NO EXTENSIONS will be given. Many investors will not purchase these loans past September 19, 2008 to prepare to for the October 1 deadline. PLEASE talk to your lender for their specific requirements and guidelines regarding ALL your customers who are using or plan to use Down Payment Assistance Funds before October 1
FNMA and FHLMC Tighten Credit Guidelines for Converting Primary Residences to Second Homes or Investment Properties
If…Current principal residence is pending sale but the transaction will not be closed (with title transfer to a new owner) prior to the new transaction Then…Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction.
The current principal residence will be converted to a Second Home
Then…• Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction; and
• 6 months of PITI for both properties is required to be in reserves. Lender may consider reduced reserves of no less than 2 months for both properties if there is documented equity of at least 30 percent in the existing property (derived from an appraisal, automated valuation model (AVM), or Broker Price Opinion (BPO), minus outstanding liens)
If…The current principal residence will be converted to an Investment Property
Then…Fannie Mae will permit up to 75 percent of the rental income to be used to offset the mortgage payment in qualifying AS LONG AS
1. There is documented equity of at least 30 percent in the existing property (derived from an appraisal, AVM, or BPO, minus outstanding liens).
2. The rental income can be documented with:
- a copy of the fully executed lease agreement; and
- the receipt of a security deposit from the tenant and deposit into the borrower’s account.
If the 30 percent equity in the property cannot be documented
1. Rental income may not be used to offset the mortgage payment
2. Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction
3. 6 months of PITI for both properties is required to be in reserves.
FNMA Determines Credit Requirements for Borrowers who have a prior pre-foreclosure sale
A pre-foreclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer. Due to the increased incidence of pre-foreclosure sales, Fannie Mae has established a 2-year elapsed time period for reestablishing credit following completion of the action. No exceptions are permitted to the 2-year time period due to extenuating circumstances.
If you are looking for a tax-deductible vacation- consider attending this great Symposium:
The 4th Annual Real Estate Tax & Law Symposium-October 19th-October 28th; The Fairmont Kea Lani Resort and Spa, Wailea, Maui HI
Email Amy if you would like more information
Thanks for the update.
Aloha,
Keahi
Regarding the information about Seller-funder Down Payment Assistance. There is still a way to save those programs. I support This bill. Anyone who wants to help fight go to www.dpagroundswell.org.
H.R. 6694
A bill introduced by Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays on July 31, 2008, that would reinstate SF-DPA. If passed and signed into law, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) will allow downpayment assistance to continue indefinitely.
It is gettting closer to Oct. 1st Lets fight to save Down Payment Assistance programs! Fight Hard!
H.R. 6694
A bill introduced by Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays on July 31, 2008, that would reinstate SF-DPA. If passed and signed into law, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) will allow downpayment assistance to continue indefinitely.