The Silicon Valley Association of Realtors has received three announcements from the U.S. Department of Housing and Urban Development (HUD) regarding the Federal Housing Administration (FHA) loan programs, which could impact potential home buyers and homeowners.
"These changes impact annual premiums, qualifying credit scores and new refinancing programs," said Jeff Bell, president of the local trade association. "We are asking our members to share the information with their clients and the public."
HUD is increasing the annual premium and lowering the upfront premium for FHA-insured mortgages starting October 4, except for Home Equity Conversion Mortgages. These changes will help FHA be in a better position to address the increased demands of the marketplace and return the Mutual Mortgage Insurance fund to congressionally mandated levels without disruption to the housing market. HUD has the authority to increase annual premiums up to 1.55 percent, but is not utilizing its full authority at this time.
For all traditional purchase and refinance products, the upfront premium is being decreased to 1 percent. For mortgages involving an original principal obligation of less than or equal to 95 percent of the appraised value of the property, the amount of the authorized annual premium is increased to 1.5 percent (from .50 percent) of the remaining insured principal balance. For mortgages involving an original principal obligation that is greater than 95 percent of the appraised value of the property, the amount of the authorized annual premium is increased to 1.55 percent (from 0.55 percent) of the remaining insured principal balance.
The upfront and annual premiums changes will apply to all mortgages insured under FHA's Single Family Insurance Programs, except Title I, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian Reservations), Section 223(e) (declining neighborhoods), and Section 238(c) (Military Impact areas in Georgia and New York).
Effective October 4, in accordance with the final Federal Register Notice on minimum decision credit scores, the new credit requirements for FHA loans are:
Also, in an effort to help responsible homeowners who owe more on their mortgage than the value of their property, HUD is providing an additional refinancing option for underwater borrowers. The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth because their local markets saw large declines in home values. For more information including eligibility requirements for this new program, visit the HUD website at www.hud.gov.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.