Category: New Real Estate Laws

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

Great news for those who experienced hardships during the economic downturn!

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.

Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.

For borrowers who went through a recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond the borrower’s control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.

Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.

According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.

The new guidance is for case numbers assigned on or after August 15, 2013, and is effective through September 30, 2016.

I read this article at: http://www.dsnews.com/articles/fha-trims-waiting-period-for-borrows-who-experienced-foreclosure-2013-08-19

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Hip Hip Hooray!!! Tax Relief Bill PASSES SENATE!

UPDATE ON SB 30

C.A.R.’S TAX RELIEF BILL PASSES SENATE

The state Senate today passed C.A.R.’s tax relief bill without a single “no” vote. SB 30, which provides tax relief to those who are selling a home in a short sale, will now be considered in the state Assembly.

In late May, the Senate Appropriations Committee linked SB 30 to SB 391, a C.A.R.-opposed bill that creates a recording tax. This link, in the form of an amendment, says that SB 30 cannot take effect unless SB 391 does as well. While we are troubled by this transparent political maneuver meant to force C.A.R. to support the recording tax, C.A.R. will continue to work toward the passage of SB 30 in the Assembly, the defeat of the recording tax, and the delinking of the two bills.

Thank you to the thousands of REALTORS® who contacted their senators in support of SB 30 and in opposition to the recording tax.

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Thanks for reading – Sabrina

New Changes in FHA Loans

Just got news that the FHA mortgage is changing its up front fee!  Take a read direct from HUD.GOV…

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-037

Quick Overview…

FHA loans have reported high losses over the last few years, and this has brought up concerns that the FHA program may need a bailout in the future.

In a move to increase their financial standing, on Monday, HUD announced their anticipated increases in the premiums they charge borrowers. The cost of borrowing with FHA is going to go up.

FHA loans, by design, are more liberal in their underwriting guidelines than conventional loan products (in terms of credit, income ratios, required investment from the borrower, and maximum loan amount). HUD is not a lender. Rather, it is a federally-insured insurance company. They insure lenders against default on loans underwritten in compliance with their published guidelines. It is because of this insurance that lenders approve and close loans with more liberal guidelines.

As an insurance company, HUD charges two types of premiums on the FHA mortgages:

•           The UFMIP (Up Front Mortgage Insurance Premium) will be raised effective April 1, 2012 from its current 1% to 1.75%. One advantage to the UFMIP is the fact that it is typically built into the loan amount and does not require additional cash outlay at closing.

•           The MMIP (Monthly Mortgage Insurance Premium) will be raised from 1.15 to 1.25% of the loan amount annually, starting on April 1, 2012 .

On a loan amount of $300,000, we will see an increased monthly payment of $36.41.

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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HAFA Short Sale Program

When a homeowner is faced with loosing their home or selling it as a short sale – the decisions are difficult and time consuming.  Often the hoop jumping to work with the bank becomes a second job.  If the loan modification didn’t pan out and the mortgage payments will overwhelm the family – selling the home may be the best course of action.  Foreclosure is the last thing anyone wants to face.  And as a Realtor, the last thing I want to see happen to anyone.

The best course of action is to contact the bank and inform them of the situation immediately. That’s where the HAFA program (Home Affordable Foreclosure Alternative) comes in.  HAFA was created to streamline the process and get the homeowner out of the home with provisions to assist them with the sale and conditions to protect them afterwards.

For more information – please visit:

http://www.realtor.org/government_affairs/short_sales_hafa

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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HARP Refinance Program Expanded

Got questions about the new HARP Refinance Program?  Clink on the link below to access up to date information.

Click to access HARP_release_102411_Final.pdf

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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WHAT YOU NEED TO KNOW ABOUT UPCOMING CHANGES TO FHA LOANS

WHAT YOU NEED TO KNOW ABOUT UPCOMING CHANGES TO FHA LOANS

As you may know, unless Congress extends the expiration deadline, Federal Housing Administration (FHA) loan limits set in 2008 will drop significantly beginning October 1. Congress raised the loan limit amount in response to the housing crisis to help spur the homebuying market. FHA loans offer borrowers very competitive rates and terms, and they only require a 3.5% down payment. Allowable debt ratios are higher than the typical debt-ratio limits imposed for conventional loans, and there are no income limit qualifications, so more people can qualify for them.

If the loan limit drops on October 1, many California homebuyers will face higher down payments, higher mortgage rates and stricter loan qualification requirements. Borrowers seeking larger mortgages will have to apply for conventional loans or jumbo loans, which may be subject to higher interest rates and down payments. Here are four things you should know to help your clients now.

1. LOWER LOAN LIMITS. The conforming loan limit determines the maximum mortgage amount that FHA, Fannie Mae and Freddie Mac can buy or guarantee. If your client wants to stay under the current loan limits, then encourage them to purchase now and close by September 30th.

2. DROPS BY COUNTY. Under the new FHA loan limits, some counties will see significant drops in their loan limits. San Diego County will experience a $151,250 drop, Sonoma County a $141,550 reduction, while Orange and Los Angeles Counties will drop by $104,250. To see a full, county-by-county list of changes, click here.

3. JUMBO LOANS. The current FHA loan limit is $729,750. After October 1, that limit may drop to $625,500. Mortgage loans higher than that amount will be considered non-conforming jumbo loans, which typically have rates that are 0.875% to 1.5% higher than conforming rates, depending on the loan product, and require higher down payments.

4. MORE STRINGENT REQUIREMENTS. FHA loan requirements may allow for lower credit scores. So an applicant with a lower FICO score can still qualify for an FHA loan, even if they can’t for a conventional loan. Your clients may be able to obtain an FHA loan three years after defaulting or having a loan foreclosed.

Got Questions? – The Caton Team is here to help.  Email us at:

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SAFETY FIRST – Carbon Monoxide Poisoning Prevention Act (Senate Bill – SB 183)

As of July 1, 2011, the Carbon Monoxide Poisoning Prevention Act (Senate Bill – SB 183) will require all single-family homes with an attached garage or a fossil fuel source to install carbon monoxide alarms within the home by July 1, 2011.

Owners of multi-family leased or rental dwellings, such as apartment buildings, have until January 1, 2013 to comply with the law. The California State Fire Marshal has created this frequently asked questions (FAQ) on carbon monoxide devices to provide the citizens of California with information on this important matter.

1. What is Senate Bill No. 183 (SB-183)? SB-183 is also known as the “Carbon Monoxide Poisoning Prevention Act” This senate bill requires that a carbon monoxide (CO) detector be installed in all dwelling units intended for human occupancy.

2. What is Carbon Monoxide? Carbon Monoxide is a colorless, odorless gas that is produced from heaters, fireplaces, furnaces, and many types of appliances and cooking devices. It can also be produced by vehicles that are idling.

3. What is the effective date for installing a CO device? For a single-family dwelling, the effective date is July 1, 2011. For all other dwelling units, the effective date is January 1, 2013.

4. Where can I find a list of all CSFM listed carbon monoxide devices? Click on the link titled “List of Approved Devices”. http://osfm.fire.ca.gov/strucfireengineer/strucfireengineer_bml.php

5. What is the definition of a dwelling unit? A dwelling unit is defined as a single-family dwelling, duplex, lodging house, dormitory, hotel, motel, condominium, time-share project, or dwelling unit in a multiple-unit dwelling unit building.

6. Where should CO devices be installed in homes? They should be installed outside each sleeping area and on every level of the home including the basement. The manufacturer’s installation instruction should also be followed.

7. How many types of CO devices are available? There are three types. 1) Carbon Monoxide alarms (CSFM category # 5276), 2) Carbon Monoxide detectors (CSFM category # 5278), and 3) combination smoke/Carbon Monoxide detector (CSFM category # 7256 or 7257).

8. What is the difference between a carbon monoxide alarm and a carbon monoxide detector? A carbon monoxide alarm is a standalone unit which is tested to Underwriters Laboratory (UL) Standard 2034 and has its own built-in power supply and audible device. These units are typically installed in your single family dwelling. A carbon monoxide detector is a system unit which is tested to UL Standard 2075 and is designed to be used with a fire alarm system and receives its power from the fire alarm panel.

9. Are CO devices required to be approved by the State Fire Marshal? Yes. SB-183 prohibits the marketing, distribution, or sale of devices unless it is approved and listed by the State Fire Marshal.

10. If someone has a CO device that is not listed by the State Fire Marshal prior to the law, can they maintain it or does it have to be replaced? The law required that CO devices to be approved and listed by the State Fire Marshal. It does not prohibit someone who already owns the device prior to the effective date of Senate Bill (SB) 183.

11. Where does one obtain a copy of a California State Fire Marshal (CSFM) listing of CO device? Copies of CSFM listing of CO devices can be found on the State Fire Marshal website by logging on the following: http://osfm.fire.ca.gov/licensinglistings/licenselisting_bml_searchcotest.php Under “Category”, click on the sort by “Number” button, then go to the drop down menu (right down arrow) to select “5276-CARBON MONOXIDE ALARMS” or “5278-CARBON MONOXIDE DETECTORS”. Then Click on “Search” and it will list all CO alarms or detectors that are currently approved and listed by the OSFM.

12. Where can I go to receive further information on Carbon Monoxide? You may go the California Department of Forestry and Fire Protection (CAL-FIRE) web site at http://www.fire.ca.gov and click on Carbon Monoxide under “Hot Topics”.

13. Who can we contact at CAL-FIRE/CSFM for additional information? Questions regarding carbon monoxide devices may be addressed to Deputy Mike Tanaka at (916)-445-8533 or mike.tanaka@fire.ca.gov

 

Thank you to Castle Rock Inspection for a great reminder!

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

Please enjoy my personal journey through homeownership at http://ajourneythroughhomeownership.wordpress.com/