Karl's Mortgage and Related Info Site

Karl Peidl
Pleasant Valley Home Mortgage Corp.
305 Harper Drive, Suite 3
Moorestown, NJ 08057

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FHA Appraisal and Lender Eligibility Update

Explained by Jeff Mifsud, this update contains the pertinent changes to Appraiser and Lender Eligibility guides as outlined in Mortgage Letters 2009-28, 29, 30 and 31.

Here are the 8 things you need to know about these changes:

Appraisers

1. Changes are effective as of January 1st, 2010.
2. Mortgage brokers and commission based lender staff are now PROHIBITED from selecting the FHA appraiser.
3. Lenders are not required to use Appraisal Management Companies, but may do so.
4. When a borrower switches to another lender, FHA prohibits the 2nd lender from ordering additional appraisals to obtain a higher value, unless: a. The DE Underwriter determines the 1st appraisal is deficient, b. The Appraiser of 1st appraisal is on 2nd lender's exclusionary list, or c. First lender delayed the appraisal transfer to the 2nd lender so as to cause a harm to the borrower, e.g. missing a closing date, or expiration of a rate lock.
5. Appraisals are now valid for only 120 days for all existing and proposed or under construction properties.

Lender Eligibility

1. Changes are effective as May 20th, 2009 in accordance with the Helping Families Save Their Homes Act of 2009.
2. A Lender or Mortgagee applying for FHA approval may not currently employ anyone who is currently suspended, debarred, under indictment, under investigation by HUD, or was convicted or pled guilty to a felony related to the real estate or mortgage industries during the 7 year period prior to the date of the application or any time if felony involved fraud, dishonesty, breach of trust, or money laundering.
3. FHA lenders must use their HUD registered name in all advertisements and promotional materials and keep copies of all materials for 2 years from date of use.

Previous FHA changes

According to a letter that went out to lenders this week, The Federal Housing Administration (FHA) plans to make it tougher for borrowers to secure a cash-out refinance mortgage.

Until now, the FHA has approved cash-out refinances for homeowners who have at least 5% equity in their properties and a record of on-time payments for at least one year.

However, beginning April 1, this type of refinancing will be restricted to borrowers with at least 15% equity in their homes.

This is a "temporary change" said current FHA Commissioner Brian D. Montgomery, while the FHA determines whether "permanent measures" should be taken.

In other words, give us a call today. We only have until the end of the month to make an application before the new rules are implemented. Who knows what new restrictions the FHA will have in place in the future.

Karl Peidl

1-800-706-6671 ext 4349

kpeidl@supmort.com

This update from FHA Letter 2009-08 establishes temporary cash-out refi guidelines.

Here are the 9 things you need to know about these changes:

1. This is a temporary change, and effective as of April 1st, 2009 (No, it's not a joke).

2. When adding a simultaneous 2nd lien, there will be a max CLTV of 85%.

3. Existing 2nd liens can be re-subordinated with no max CLTV.

4. When existing 2nd liens are modified to accommodate the new 1st, there is no max CLTV.

5. Must have 12 months seasoning as primary residence to get max cash-out of 85%.

6. Less than 12 months seasoning as primary residence, loan amount will be capped at 85% of the appraised value or sales price, whichever is lower.

7. Existing loan must be current and not delinquent or in arrears.

8. A second appraisal is required for all cash-out refis above $417,000.

9. Non-owner occupants cannot be added to qualify for cash-out refis.