As a borrower it may be a bit more difficult to obtain FHA financing in 2010.  Today the FHA announced a series of changes to the FHA insured mortgage program aimed at increasing home ownership in underserved neighborhoods.  The program has become the most widely used program for first-time buyers or move up buyers with down payments less than 10%.

In the FHA official announcement today it spelled out a series of changes that will increase the capital fund of FHA as an effort hedge against the increase of defaulting mortgages.  Fortunately FHA retained the minimum down payment of 3.5%.  The changes will consist of the following:

• Increased mortgage insurance premium by .5% (from 1.75% to 2.25%).
• Seller concessions (credit towards closing costs) reduced from 6% to 3%.
• Increased enforcement on FHA lenders/banks.
• 580 FICO score now required to qualify for 3.5% down payment program (Scores below will require 10% down payment.  However, nearly all FHA lenders nationwide have a minimum 620 FICO score overlay).

The changes come as a necessary precaution for FHA to avoid asking the federal government for assistance to sustain it's mortgage insurance for homeowners.  FHA does not actually service the mortgages issued by FHA, but insures the loans serviced by the banks.

As a borrower, the increased mortgage insurance premium will have a small impact on your monthly payment and the limit of 3% seller concessions may require you to come to closing with a bit more cash to cover the exceeding amount of closing costs and prepaid items.

The increased enforcement on FHA lenders/banks will be determined by each banks servicing and performance of current FHA loans.  As a precaution to retain the ability to fund FHA loans we will see increased lender guideline overlays in the near future.  A guideline overlay is an individual lender/bank guideline that is usually more stringent than the standard loan guidelines.  As a result guidelines may vary significantly between banks.

We will likely see an increase in FHA loan denials in 2010.  A borrower's FHA loan may be denied simply because it was sent to the wrong FHA lender.  If you have questions about an FHA loan or want to know if you qualify feel free to give me a call or email me.  As a broker, Landmark Mortgage has several options for FHA lenders.  It will be important for borrowers to work with a knowledgeable broker who has experience and options for each FHA loan applicant.  As a loan officer I will find the right fit for your specific loan profile.

FHA will issue a Mortgagee Letter tomorrow announcing the exact dates of implementation.

Zillow just announced they have expanded their real estate web presence with the addition of rental properties.  As of yesterday, when I checked, the website had the "New! Rentals" tab listed on the "Homes" search tab at the top of the page.  If you search properties for Salem, Oregon there are currently 0 rental listings since the service is literally a day old.

I know that I've had a tremendous amount of success with listing rental properties for myself and friends (those needing help to post) with listings through the ever so wonderful Craigslist.org.  I'm sure I'll write about this again sometime in the near future as we begin to see some traffic on Zillow's rental tab.  The immediate downfall of Zillow is a cost.  Craigslist is loved mainly because it's free and people know to look there.  Currently potential renters don't know to look to Zillow unless they are also conducting some research on a possible purchase.  However, the cost to list a rental is not significant.  From what I've read it looks like it will run you $9.95 for a 180 listing.  That's not too bad.

Personally, I like Craigslist.  However, I mainly post there because I know people are looking.  Zillow is well known in the online real estate search category so I expect this new rental search to be pretty darn hot.  I can see property management companies and personal investors flocking to a single location where all properties can be viewed.  Craigslist will still be alive.  And depending on your location (i.e. the Bush Park neighborhood here in Salem) a sign in the yard may be all it takes for you, but if you need some additional help in getting your rental listing viewed, you might want to try www.zillow.com.

The Ducks pulled out a squeeker, mortgage rates are low, I heard my new baby's heart beat for the first time and we get to spend a couple of days with extended family this week! In my book this week couldn't get any better.

I am more than excited for the Civil War match up this year. The hype in the state of Oregon this week is incredible. I look forward to watching the game next week with anticipation and hope that the Ducks will be making a trip to Pasadena for New Years!

We're reaching the one year anniversary of the Treasury's announcement of their plan to begin purchasing Mortgage Backed Securities. On November 26th, 2008 we saw an overnight drop in rates that created a big surge in mortgage applications. Since the plan was initiated the $1.2 trillion (eek) in MBS purchases has sustained mortgage rates for FHA and conforming loans in the 4.5%-5.25% range. There was a bit of worry that the Treasury would pull back the program in early Fall, but now the picture has been painted that we'll see the remaining funds be phased out towards the end of the first quarter of 2010. The combination of the Home Buyer Tax Credit extension/expansion creates a great opportunity for those in position to purchase RIGHT NOW.

On a more personal level, my wife Kari and I had our first doctor appointment for her new pregnancy and we were able to hear the precious heart beat of our new little one.  Our boy/girl twins are now 21 months and are beginning to get the idea that there's a baby coming to the Venti house.  I am blessed to have an amazing little family and look forward to the adventure of having more kids than adults in our family!

During this Thanksgiving season, I wish to express my  appreciation to you for placing your confidence and trust in me.  I am blessed to be in a position to serve you, your friends and your family.

May your Thanksgiving be a joyful time of fellowship.  

“Give thanks to the Lord, for he is good; His love endures forever.” Psalm 107:1

We must have a passion for what we do in life.  This man encapsulates the meaning of a niche.  And he loves it.  Simply beautiful.

I want to send a very big thank you out to all Veterans who have served our country.  We are extremely blessed by our freedom and life would not be the same without each and every one of you.  I appreciate your service to our country and your dedication to the fight for our freedom!

Happy Veterans Day!

President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009.  The act extended the tax credit for first time homebuyers for contracts written before May 1, 2010.  The sale must fund prior to July 1, 2010.  The act also expanded the tax credit for existing homeowners who have owned and occupied their primary residence for at least 5 of the last 8 years.  Surprisingly this expansion is effective at time of enactment which is today November 6, 2009.  That's a real nice surprise for anybody who is closing in the month of November and fits into that category!

Below are two helpful resources for further detail of the act:

Tax Credit Changes (NAR Government Affairs)

Detailed of certain provisions of the Worker, Homeownership and Business Assistance Act of 2009

Fannie Mae announced a last resort option for distressed homeowners today. They will begin working with homeowners who have Fannie Mae serviced loans and are not eligible for the offered "work-out" or modification programs.

From Fannie Mae: Fannie Mae Announces Deed for Lease™ Program

Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.

"The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities."

The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

Good afternoon!  There is some solid evidence coming from the Senate this afternoon that a move to extend the tax credit is highly probable.  Updates to the extension/expansion/revision include:

• Increased income limits for eligible borrowers.
• $8,000 or 10% of the purchase price would remain the the credit for FTHB.
• $6,500 for home buyers who have lived in their home for 5 years and are selling to purchase again.
• Tax credit would expire April 30, 2010 with an additional 60 days to close (contract must be written prior to April 30th).

The proposal from the Senate will set the tone for discussion.  Please note, this does not mean it's a done deal by any means.

Information courtesy of Bloomberg (click to see the entire article).