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Remember the HUD changes regarding FHA loans on condos? One aspect overlooked by many is the provision that requires condominium projects to be recertified by HUD every two years. Condos approved prior to October 2008 were granted a transition period to be recertified. The expiration of this transition phase is upon us.
If you are listing or your client is purchasing a condominium, listen up! Condo projects that obtained FHA approval prior to October 1, 2008, must be recertified by December 7, 2010 or it will lose FHA approval status. This means a borrower using FHA financing will not be able to close their loan until the recertification is complete (a process that is averaging 45-60 days).
My advice:
- Check a condo project’s approval status before listing or submitting an offer if FHA lending is a factor. Approval expiration date shows a date beyond 12/7/10? Then laissezles bon temps rouler!
- Project’s approval expiration date showing ‘nearing expiration’? Contact the HOA to see if they (a) are aware of the expiration and HUD’s requirement then (b) ask if the recertification process has begun.
- If the approval is expired and the HOA has not yet submitted for recertification, share HUD’s Recertification Processing Requirements with them. Time is of the essence because projects not recertified within six months after the approval expiration date will need full project approval (which requires additional documentation and time).
Accessibility to FHA financing is crucial when marketing a condo because of the high numbers of buyers using this type loan. If you want to know the status of a condo, feel free to send me the address and development name. I’ll let you know where it stands and make any recommendations if needed. I’m here to help so just ask!
UPDATE 12/9/10: Per the MBAC ->
FHA announces extension of condominium project approvals with an expiration date of December 7, 2010. Provided below are the extension dates based on five-year time frames with the exception of those condominium projects with original approval dates from 1972 -1985.
Initial Project Approval Dates Current Expiration Date New Expiration Date
1972 – 1980 December 7, 2010 December 31, 2010
1981 – 1985 December 7, 2010 December 31, 2010
1986 – 1990 December 7, 2010 May 31, 2011
1991 – 1995 December 7, 2010 July 31, 2011
1996 – 2000 December 7, 2010 August 31, 2011
2001 – 2005 December 7, 2010 September 30, 2011
2006 – 2008 (Sept) December 7, 2010 March 31, 2011
The extensions were granted to reduce the impact of processing and reviewing the number of project approvals expiring at the same time while recognizing current housing market conditions. Lenders and/or other interested parties are encouraged to begin the re-approval or recertification process as early as possible as it is not anticipated that any further extensions of project approvals will be issued.
The Condominium look-up page and the FHA Connection databases were updated on December 7, 2010 and now reflect the extended expiration dates. The links to the sites are:
Condominium look-up page: https://entp.hud.gov/idapp/html/condlook.cfm
FHA Connection: https://entp.hud.gov/clas/index.cfm
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As a reminder, FHA’s mortgage insurance changes are in effect as of today. The change brings an increase and a decrease.
The new Upfront Mortgage Insurance Premium (UFMIP) that is rolled into a borrower’s loan dropped from 2.25% to 1% for all amortization terms. The annual MI premium increased to .25-.90% depending on the loan’s amortization term (.90% for the most popular FHA scenario – 30 year fixed with a 3.5% down payment).
The loan amount is less but the MI increases the payment. Clients benefit in the long term by paying less interest, but the monthly mortgage payments are higher.
FHA remains a smart option for many clients. My advice for you, regardless of loan type, is know why a particular program is your best strategy and what goals it achieves. Not sure? It would be my pleasure to help explore your options.
Enjoy this info? Would you like to receive Monday Money Matters – a weekly newsletter with useful mortgage and Charlotte area real estate information? Subscribe here or visit www.RebeccaMadej.com to learn more.
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Home Buyer Tax Credit: The Final Countdown. Sounds like the last movie in an action series doesn’t it?For those of us involved in the housing industry, a tax credit influenced market has been action packed. The first edition of the tax credit spurred sales and then its extension has given housing an extra boost. The most recent numbers showed a 27% boost in March to new construction sales. But what’s next?
We know foreclosures will put pressure on prices, keeping them low for some time, but the silver lining is homes will be affordable for a greater number of buyers. We also know that with the Fed’s completion of their MBS purchase program, rates are likely to rise but haven’t yet skyrocketed as previously feared. So what’s next?
If I had a crystal ball now would be the time to use it. What I can say is that here in my corner of the world interest in buying a home and putting one under contract is on the upswing and it would be nice for the momentum continue. It’s to early to say what the market will be after the tax credit expiration on Friday but in the meantime, we’ll just have to wait and see.
Featured Loan Program
FHA
Cunningham & Company offers FHA financing which allows for easier qualification, lower down payment and reduced mortgage insurance.
· Available for 1 to 4 unit properties, as well as condominiums and manufactured homes· Max loan limit for Charlotte MSA is $303,750 for a single family home· Fixed rates and ARMs available· Down payments can be as low as 3.5%· Gifts for down payments and closing costs are allowed· Will allow a home purchase 2 years after a bankruptcy and 3 years after a foreclosureHave You Heard?
Have a client that is moving to the Charlotte area? Or just know someone that is coming to visit? Charlotte’s Got a Lot is a great resource for anyone relocating here needing to get acquainted with the Queen City. The “Calendar of Events” is beneficial to anyone interested in getting involved in the community. -
News You Can Use
Wondering what the latest news is on the USDA and FHA fronts? Details are still being worked out but here’s a summary of the latest developments:
Regarding USDA: “Congress is considering alternatives to cover the cost of the program going forward. They are discussing raising the guarantee fee in two ways. They are: 1) raise the upfront fee from 2% to 3.5% or 2) retain the upfront fee at 2% and establish an annual fee of .5%. It will probably be a week or two before the USDA funding issue is resolved.”Either way, having access to 100% financing can be a smart strategy for some buyers. If they find a home in an eligible area and are conscious of the loan’s associated fees, it’s a great deal.Regarding FHA’s seller concessions: “FHA has sent the Notice soliciting public comments on lower allowable seller sales concessions (from 6% to 3%) to OMB for review. This means the Notice will probably be published for comment in 30-60 days.” Accordingly, implementation will likely be delayed until late Summer (August-September) vs the original target date of June.Until this is sorted out, the additional 3% that is allowed can make a huge difference in a buyer’s down payment plan. This is a great marketing tool for potential sellers.Have questions about either program? Give me a shout and have a great week!Featured Loan Program
$100 Down FHA Repo Program
It’s now possible for buyers to purchase a HUD repo for $100!- Owner Occupied only
- FHA financing is used in conjunction with this program
- Available for 1 to 4 unit properties, as well as condominiums and manufactured homes
- Max loan limit for Charlotte MSA is $303,750 for a single family home
Have You Heard?Charlotte Magazine’s Best of the Best is available to the public now. From the Queen City’s best cooking classes to the best sketch comedy group, you will have a lot of fun browsing the broad spectrum of categories and even more fun planning your outings to test for yourself. -
News You Can Use
What a weekend for the restaurant industry. Back to back reservations, romantic menu pairings, worn out wait staff. A hundred dollars can easily be spent during a night on the town. Did you know that $100 can also be a down payment on a home? It most certainly can if you qualify for FHA’s HUD repo $100 down payment program.With the selection of foreclosed homes in our area, there are more and more opportunities available. Sure, there are certain guidelines that must be met but if you find an eligible home that you want, it is a sweet deal. Just think of all the surf and turf you can afford after saving that kind of money.
Pair the opportunity of purchasing a foreclosure with the latest report that Charlotte home values are increasing and you’ve really got something going. The average sales price in Charlotte is up over 6% than last January and marks the third consecutive month that numbers are positive. The true test of the market will be once the tax incentives go away but until then, let’s log all the gains we canRates are holding steady for now which means it is still an excellent time to lock in. If you’ve been lucky enough to snag a low rate and refinance, here are some tips for maintaining your property.Featured Loan Program
$100 Down FHA Repo Program
It’s possible for buyers to purchase a HUD repo for $100!- Owner Occupied only
- FHA financing is used in conjunction with this program
- Available for 1 to 4 unit properties, as well as condominiums and manufactured homes
- Max loan limit for Charlotte MSA is $303,750 for a single family home
Have You Heard?
Thinking of sprucing up a room in your home? Perhaps the bathrooms need a “pick me up?” Mirror Mate could be your answer…. Who knew a simple frame could make such a difference? Both easy and affordable, this Charlotte-born creation sounds like the right solution for a mini-makeover.Enjoy this info? Would you like to receive Monday Money Matters in your inbox? Subscribe here!
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Change is inevitable. “What now?” you might ask. FHA is responding to its recent mortgage rate defaults with an announcement that guidelines will be tightening up this Spring. For starters, the up-front Mortgage Insurance premium will rise from 1.75% to 2.25% but it still can be financed into the borrower’s loan. Also, seller concessions on purchases will decrease from 6% to 3%. These FHA changes are aimed to shore up HUD’s reserves, allow underwriters to have a more watchful eye on who qualifies and most importantly, who is likely to have the ability to make timely payments. These changes will go into affect for FHA case numbers assigned on or after April 5, 2010.
The minimum down payment remains the same - 3.5% (for borrowers with 580+ credit scores) and the decrease in seller concessions will have a minimal impact since most borrowers’ closing costs and prepaids average around 3.5%. So some say the changes aren’t negative and HUD is doing what they can to keep the housing market on the road to recovery. For instance, HUD is waiving the 90 day waiting period for selling foreclosures for a year to speed the resale of foreclosed homes. This encouraging change will surely help the Charlotte area’s sales to continue to rise as the year progresses.The bottom line is that mortgage guidelines will always adapt in an effort to limit loan default. Will some home buyers be unhappy with the changes? Sure. Will we make sure clients have all of the information they need to make the right mortgage choice? Absolutely. Change is a given but so is our dedication to outstanding customer service.Featured Loan Program
FHA
Cunningham & Company offers FHA financing which allows for easier qualification, lower down payment and reduced mortgage insurance.
- Available for 1 to 4 unit properties
- Max loan limit for Charlotte MSA is $303,750 for a single family home
- Fixed rates and ARMs available
- Down payments can be as low as 3.5%
- Less stringent qualifying requirements
- Gifts for down payments and closing costs are allowed
- Will allow a home purchase two years after a bankruptcy and three years after a foreclosure
Have you heard?
Have you heard there is an iPhone application just for Charlotte Metro MLS listings? Thanks to HomeLikes new app, no more paper fliers to collect. Home shoppers can simply plug in their agent’s custom branded code to see what is available while on the go. Sounds smart to me! Realtors, check out their website to see how you can get signed up.Enjoy this info? Would you like to receive Monday Money Matters in your inbox? Subscribe here!
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For homeowners wanting something a little different but selling isn’t the answer, remodeling and ‘nesting’ is back in vogue. Nesting is fixing up the home you already own and in spite of some hurdles (tightened belts and reduced HELOCs) it is contributing to a rebound in remodeling activity. This year was a lean one for this sector but signs are pointing to a comeback. Enhancing a home’s strong points and perhaps adding features is a smart move because it positions a home to bring the greatest resale value whenever it is the right time to sell.
For homeowners deciding to stay put and with rates at historic lows, a refinance could be another smart choice. There are several top tips to considerwhen weighing the benefits of a refinance. Truly the best way to evaluate the options is to have a thorough evaluation of your refinancing goals and the short and long term benefits. If you or someone you know is considering a refi, please give me a call – I’ll make the options and their respective advantages/disadvantages clear and understandable.
A new year is just around the corner. That means there’s a whole group of new clients to serve – those wanting to sell, buy, test the waters and everything in between. We all know our existing clients are the cornerstone our business and that new clients are crucial. Finding new clients can be a challenge but each of us has something unique and valuable to offer them. You just have to define it and find the people you can serve the best!
This week is a light one for economic reports. The major ones will be released Thursday and Friday and there’s a Treasury auction on Wednesday. We’re likely to see the most rate movement in the latter part of the week.
Featured Loan Program
FHACunningham & Company offers FHA financing which allows for easier qualification, lower down payment and reduced mortgage insurance.
- Available for 1 to 4 unit properties
- Max loan limit for Charlotte MSA is $303,750 for a single family home
- Fixed rates and ARMs available
- Down payments can be as low as 3.5%
- Less stringent qualifying requirements
- Gifts for down payments and closing costs are allowed
- Will allow a home purchase two years after a bankruptcy and three years after a foreclosure
Have you heard?
Have you heard about Merry Market – Charlotte’s two-day shopping event? Today and tomorrow at 5500 Carmel Park Drive you can wrap up your holiday shopping with fantastic and unique gifts. Vendors include The Purple Martin & Co and Nanniboos - check it out!
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The housing marketing has certainly taken it on the chin this year; however, the condo market has had it even harder – several black eyes and maybe a sucker punch or two. Part of what made the condo market tough is how tight lending and mortgage insurance guidelines have become. As Benjamin Franklin said “when the well is dry, we learn the worth of water” - folks, it’s about to rain changes for condo lending, so get ready.
Starting February 1st the FHA condo changes may be just what this market needs. ‘Spot approvals’ as we know them will go away and in its place will be a centralized list of approved HUD condo projects. The FHA concentration within a project is increasing – from 10% to 50%, and in some cases up to 100%. Presolds in new projects are being reduced to 30% as well. Many speculate that these changes will breathe new life into the condo market and I certainly agree.
Some of the condo questions I hear are buyers asking ‘what type of financing is available to me?’ and REALTORS asking ‘how can I best market this condo?’ If you’re considering purchasing or listing a condo, please review this handy checklistto get an overview of current condo guidelines and as always, ask any questions you have.
In this holiday shortened week there are seven economic reports that are likely to impact rates. We should see the most movement on Tuesday and Wednesday.
Featured Loan Program
USDA
USDA has changed how it calculates the maximum income limits. What this means is that families who previously made too much to qualify for USDA now may! Cunningham & Company offers USDA loans to help low-income individuals or households purchase homes.
- 100% Financing with no Mortgage Insurance
- No Loan Limit
- Property and borrower’s income must meet program guidelines
- May be used for new or existing properties
- Areas in and around the Charlotte MSA are eligible
Have you heard?
Have you heard that Charlotte’s culinary extravaganza – aka Charlotte Restaurant Week – will be back in January? Rumor has it that Charlotte’s best restaurants will offer the signature 3-course, $30/person prix fixe dinner January 22nd – 31st. Website with details including list of restaurants goes live New Years Day. Bon appetit!
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This year brought many changes to condo lending which has led to questions and confusion:
Buyers ask: ‘what type of financing is available to me?’
Sellers ask: ‘how do I get my home sold?’
REALTORS ask: ‘how can I best market this condo?’So buyers before you consider putting a contract on a condo and agents before you decide to take a listing, consider these questions.
- Is the condo an existing project or new project? – If Less than 90% of the units in a complex have sold once – the project is considered new; there are significant restrictions for financing new condo developments (see a professional lenders advice)
- Has the condo board been turned over to the owners? If not this is an issue
- Are more than 30% of the total units in the condo development being rented? If more than 30% then no MI Company will write a policy on the property. FHA will allow up to 50% rentals.
- Are more than 15% of the HOA dues behind 30-days or more? If so this is an issue and will preclude financing – this includes Fannie Mae Limited Review.
- Does Any Single Entity own more than 10% of the units? If so this will disqualify the project.
- Does the project have adequate reserves for maintenance? Adequate reserves will (1) include allocations/line items to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project; (2) provide for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget; and (3) provide adequate funding for insurance coverage and deductibles.
- Is liability insurance in place providing at least $l Million of coverage for bodily injury and property damage per-occurrence? This is required
- Is hazard insurance in place to cover 100% of the insurable replacement cost of the project improvements, including the individual units? (The deductible amount must not exceed 5% of the policy’s face amount). Required
And as always if you have specific questions, ask me – I’m here to help
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So here we are – November – and what shall be the fate of the First Time Homebuyer Credit? We’re not sure but it definitely has been the talk of the Fall. Senate Banking Committee Chairman Chris Dodd, D-Conn says it is as good as ‘done‘ but its passage and content remains uncertain. While we wait for the final word it looks like this month will be quite busy as all type of buyers keep buying and other clients are finding smart mortgage solutions through a refinance.
On the mortgage side of things, the Mortgage Bankers Association has convened a panel to advise on how to keep FHA a viable part of our market. At over 30% of national volume, I’d certainly say it has significant impact. FHA loans are one of my favorite loan programs because they are a solid solution for many homebuyers’ mortgage needs. If you have a question on them, just ask me – I’ve likely experienced the situation you’re facing.
Speaking of what has significant national impact, let’s talk a minute about Facebook. Maybe you’re a social media fan but like to keep your updates and info contained within a small circle. If you take quizzes or play games, consider how the third party apps on social networking sites work. Your profile might not be as private as you think.
We’ll see economic reports this week on manufacturing, employment and another FOMC meeting. The first week of the month is a busy one for market influencing reports so rate swings are possible. Have questions? I’m here for you – so give me a shout if I can help.
Featured Loan Program
Good Neighbor Next Door
Who doesn’t love a 50% off sale? What about on a house?
- Teachers, policemen/women, EMTs and firemen/women can purchase a HUD foreclosed home at 50% off the list price of the home.
- Loan is set up as a 50% loan, remaining 50% is held as a ‘silent second’ that is forgiven after 3 yrs of occupancy
- Eligible Single Family homes are located in designated revitalization areas
Have You Heard?
Have you heard we have our own deal a day site for Charlotte? Groupon.com is a new entry into Charlotte but the deals have already been impressive. Groupon focuses on local businesses and as they put it ‘each day we feature something cool to do at an unbeatable price.’ Give it a try.
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