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These courses are approved for Credit by the California Department of Real Estate.
However, this approval does not constitute an endorsement of the views or opinions
which are expressed by the course sponsor, instructor, authors, or lecturers. This material
is for educational purposes only. In no way should any statements or summaries be used
as a substitute for legal or tax advice. It is your responsibility to know and understand
DRE rules and regulations concerning licensing and educational requirements. We will be
pleased to help answer your questions, but the DRE is the final authority - contact them at
916-227-0931 or visit the DRE’s website at www.dre.ca.gov
Menu




2
History of the Program




    The National Housing Act of 1934 created the
    Federal Housing Administration, which was
    established during the Great Depression when the
    rates of foreclosures and defaults rose sharply.




           Foreclosures



             Defaults


3
History of the Program




    This program allowed lower income Americans the
    ability to afford homes while at the same time
    being a self supporting government backed loan
    that allowed banks to lend without the worry of
    major default




4
Help people realize the “American   FHA Mission Revitalize Communities
                                        Stabilize and
Dream” of homeownership
Promote Economic Growth                  Reduce Defaults/Preserve Neighborhoods
FHA Goals
Educate Consumers to make informed choices

        Enable individuals to:              Simplify the home buying process:
              Own homes                        Remove regulatory barriers
      Build equity in their homes


     Embrace innovative financing:           Provide homeownership and home
      Down Payment Assistance                 retention opportunities to under
           Silent seconds                            deserved, such as:
                                                   First time homebuyers
                                                           Minorities
                                                            Elderly
FHA Myths

       Too complicated
       Too much paperwork
       Too expensive for seller
       Higher rates
       Mortgage insurance cannot be removed
       Takes too long to close
       Doesn’t benefit the buyer
       Doesn’t benefit the seller
       You have to have money to close
       Conventional is always a better loan
       Buyer can’t understand the loan
       Government gets involved



7
Conventional vs. FHA Loans
           Conventional                               FHA
Two months reserves                          No reserve requirement

Minimum 3% down with heavy                   3.5% Down Payment
Restrictions on FICO , ratios, reserves

Heavy restrictions on Gifts                  Gift funds allowed, encouraged

No non-occupant Co-borrowers                Non-occupant co-borrowers allowed (kiddie condo)
Have Higher qualifying standards

Tiered pricing based on FICO                   Pricing tiered less severely than Conventional

                                               Up to $5k medical collections can be unpaid
Collections are AUS driven                     If AUS does not allow

ARMS with caps of 5%/2%/5%                     ARMS with caps of 1%/5%


ARMS qualify at 2% above note rate            ARMS qualify at note rate

8
Conventional vs. FHA Loans
               Conventional                           FHA

Private MI required (over 80% LTV)                 Government insured


Must have DU/LP approval                           Loan can be manually approved


4 years out of Chapter 7                           2 years after Chapter 7


2 yrs. after payoff on Chapter 13                  1 yr. of on-time payments after Chapter 13


7 yrs. after Foreclosure (3 yrs with
                                                   3 yrs. After Foreclosure
Extenuating circumstances)

Minimum 2 yrs after a short sale                   Possible to purchase one day
                                                   After a short sale*


   9
FHA Flexible Credit Guidelines

                                         Minimum FICO score is 640*

         Minimum time after a Chapter 7 Bankruptcy is 2 years (12 Mos minimum with extenuating
                                       circumstances-see below)

     Minimum time period after a Chapter 13 bankruptcy is one year from creditor settlement date with
                                 proof of on time payments for that year

                   On Short Sale, it is possible to purchase a home one day after closing*

                 If little credit history is available, alternative credit can be used. Payments
                     on items such a car insurance, Utility bills or Cell phones can be used
                                            to create the credit required

           Minimum time period after a foreclosure is 3 years, unless extenuating circumstances:

                                            Death of wage earner

                                                Serious Illness

                Consumer Credit Counseling –must have paid payments on time for 12 mo.

                   *In some exceptional cases, a score lower than 640 may be acceptable



10
Down Payment Sources


• Borrower must make a 3.5% cash investment*
• Borrower’s documented liquid assets (IRA’s or 401K)
• Gift from Relative
• Gift from Charitable organization, union, public agency,
  employer or public entity
• Secured Loan
Gift Funds
     Acceptable Donors (Donor must show evidence of funds):




                                         Relative

                     Close friend w/clear interest in borrower

                        Borrower’s employer or labor union

                       Charitable or Non-Profit organization




12
Mortgage Insurance
Government Insured

Since the Government insures the loan, in a declining market there is less effect on
appraisals being chopped than conventional loan insured by a private MI company.
FHA only insures mortgages.


            Up Front MI (UFMIP)                                                  Monthly MI

 To reduce the cost of monthly MI, an upfront
 cost of 1.0% of the loan amount is added to the             The monthly Mi amount to be paid is calculated by
 cost of the loan. This cost is usually financed*            taking the base loan amount and multiplying it by
 Example: Purchase price is $200,000                         .0090

 $200k x (.965)=$193,000 (base loan amt.)                    $193,000 x (.00115)/12 - $184.96 per month.*

 $193,000 x (1.01) = $194,930

 This is the final loan amount, including financed,
 up front MI.                                         *UFMIP changed to 1.0% and monthly
                                                      MI.115% 4-18-2011

  13
Additional Concerns
Property must be owner occupied only! No 2nd homes or investment properties

Borrower must be a legal resident and must have a valid SS# (T.I.N acceptable)

Except for certain circumstances, only one FHA Loan is allowed per family

Title can be held in inter vivos trust
                              Available products-203(b) & 234 (c)

                                           30 year Fixed

                                           15 year Fixed

                                     1,3,5,7 and 10 year ARM’s

                                           3-2-1 Buydown

                                           2-1 Buydown

                           Loan Limit – In San Diego County – $546,250
   14
Additional Concerns

 Can only have one FHA loan at any time with the following
 exceptions:

                             Relocation

                        Increase in family size

                       Vacating a jointly owned
                              property

                     Non-occupying co-borrower




15
Condominiums 234 (c)




                Subdivision must be FHA approved

                Spot approval no longer available

          Do NOT trust MLS data-verify approval with a
                    reputable Loan Officer




16
Underwriting
     • 4155.1 – Mortgage Credit Analysis

     • 4155.2 – Lender’s Guide

     • 4060 –Mortgage Approval Handbook

     • National Reference Guide
       www.hud.gov./offices/hsg/sfh/ref/fhaintro.cfm

     • 245 CFR – Parts 200-499 (Code of Federal Regulations)

     • Mortgagee Letters




17
Investor Overlays
                                     Underwriting
     • HVCC

     • Not Credit Score dependent

     • Derogs in last 12 months, with poor credit

     • Cash saved at home

     • Commissions from Sale- Family member or Realtor/borrower

     • Secondary Financing




18
Essential Qualities of an FHA Borrower:
                                            Underwriting

     A demonstrated ability to repay their debts and
     obligations


     Documentation of income to
     meet the debts and obligations


     The ability to close the transaction


     Sound and acceptable assets




19
Underwriting
     Criteria: FHA’s four C’s

     • Character (credit)

     • Capacity (income)

     • Capital (reserves)

     • Collateral (value)




20
Qualifying Notes



     2 Years
     employment/se
     lf employment
     Must be stable
     Must continue
     for at least 3
     years (Alien
     Visa)
     Other verified
21
Guidelines for Converting Principal Residence to Rental

     Implemented to avoid “Buy and Bail”:


      Both current and new                                     Borrower can document 75%
        payments will be                                         LTV or lower in Current
       counted against the         Transaction must clearly        Principal Residence
      borrower’s debt ratios,     illustrate purchase is NOT
              and;                 for investment purposes

                                    Relocation – employer
                                  Downsizing or upgrading
                                            Location




22
Non-Purchasing Spouse

     Credit obligations of the spouse must be included and will be
     factored in with borrowers credit obligations (debt ratio) and
     used to determine the financial capabilities of the borrower.
     Non-Purchasing spouse disclaims




23
Appraisal Valuation Conditions

     These Valuation Conditions
     and protocol help the
     appraiser evaluate the
     standards required by the
     General Acceptability Criteria.
     The criteria are described
     below. It is helpful &
     facilitates the process if the
     following items are addressed
     prior
     to the appraiser viewing
     the property.




24
Manufactured Housing

Must have HUD ID tag (s)             Can only have been moved from
                                     factory to subject home site once;
Must have been manufactured          or factory to dealership lot to home site
>June 15, 1976                       once (cannot be moved from one home site to
                                     another)
Must be taxed as
real property                               Must have engineer’s certification
                                            that permanent foundation
                                            meets FHA guidelines


                                               Can purchase land
                                               and home with one loan
Refinancing

     Streamline Refi without an appraisal:




                                    Maximum loan amount based on :
          1. Current principal balance. This is a change that is effective November 1,
             2009, and makes it much harder to accomplish a streamlined refinance with
             costs built in. A very significant recent change.




26
Refinancing

                     Streamline Refi
                      No credit required
              Can be with or without an appraisal
                 Restrictions on loan amounts
          Refund partial old MIP and finance new MIP



      95% Cash out Refi, reduced to 85% after 4-1-09
                 Must own house >12 months
                   Cash out for any purpose
     Co-borrower can be added for qualifying (must occupy)
     Limited to 1-2 unit properties, including Manufactured



27
Options for the distressed FHA Homeowner

     Loss Mitigation/Foreclosure Prevention Tools:

     •   Forbearance
     •   Loan Modification
     •   Partial Claim
     •   Short Sale-FHA PFS
     •   Deed in Lieu




28
2 Types of 203(k) Loans
                            Streamlined                                                    Standard
                           Most common                                 Known as Rehabilitation/Renovation Mortgage.
                                                                        Less Common – Much more comprehensive
            Intended to facilitate uncomplicated                                   construction project
                      improvements
                                                                            $5k minimum for repairs, but allows
     Allows up to $35,000 to be used after closing for                     for all but one foot of the foundation
              repairs, which can be part of                                            to be torn down.
       the improved value (no minimum threshold)
                                                                                    Requires a consultant
       No General Contractor or drawings required                             Maximum mortgage is lesser of:
     Does not allow for structural improvements and                                1.Maximum FHA limit, or;
             must use licensed and bonded
                    Sub-contractors*                                           2.As-Is Value plus cost of rehab, or:

     *Subs must take ½ draw, finish the job, then get the other 1/2.       3.110% of “after improved” appraised value



     Controlling the elements of the 203(k) process leads to a successful closing.


29
203(k) Streamline


         Examples of eligible
          work under 203(k)
             streamline:
         Repair/Replace:

     1.Roofs, gutters,
      downspouts
     2.Heating,
      ventilation
     3.Plumbing,
      electrical systems
30
     4.Flooring
203(k) Streamline


     Examples of ineligible work
     under 203(k) streamline:
     1. Pool & equipment
     2. Structural improvements requiring
        drawings, a general contractor or
        layered work
     3. Relocation of a load bearing wall
     4. New construction                      For more information
     5. Room additions                        on the 203(k) program
     6. Repair of structural damage           visit:http://www.hud.
     7. Work not deemed easily                gov./offices/hsg/sfh/2
        completed in 6 months                 03k/203k--df.cfm
     8. Additional living units (if allowed
        by zoning)




31
203 (k)
     Setting Expectations

     • Underwriting Renovation Loans is a
       two part process:
         Expect conditions from both the
          credit underwriter and the
          Renovation Lending Dept. And
          not necessarily at the same
             time. This
                      product is not
             for everyone.




32
203 (k)
     Setting Expectations

     • Prepare ALL parties involved:
         Inform Realtors that you are
          applying for renovation financing
         Be aware of the close of escrow
          date
         Inform contractors of the 10%
          holdback of draws
         Manage your borrowers (buyers)
         Allow for longer closing




33
VA Loans

Also known as “Government”, but quite a bit different than FHA

  100% financing with no monthly MI to $700,000


Funding Fee (per Circular 26-11-12, as of October 1, 2011,
with less than 5% down payment):
      1.40% - Active or first time use
        1.65% - Active Reserve or Guard Duty
          2.80% - Subsequent Use (until October 1, 2012)




            Appraisal must be performed by VA approved appraiser
VA Loans
     What Fees can the Veteran NOT pay?
     The following list provides examples of items that cannot be charged to the veteran as
     "itemized fees and charges."


     1. Lender's appraisals (reviews)                       12. Notary fees
     2. Lender's inspections, except in construction loan   13. Commitment fees or marketing fees of any
        cases                                                   secondary purchaser of the mortgage and
     3. Loan closing or settlement fees                         preparation and recording of assignment of
                                                                mortgage to such purchaser
     4. Document preparation fees
                                                            14. Trustee's fees or charges
     5. Preparing loan papers or conveyance fees
                                                            15. Loan application or processing fees
     6. Attorney's services other than for title work
                                                            16. Fees for preparation of truth in lending disclosure
     7. Photographs
                                                                statement
     8. Interest rate lock-in fees
                                                            17. Fees charged by loan brokers, finders or other
     9. Postage and other mailing charges, stationery,          third parties whether affiliated with the lender or
        telephone calls, and other overhead                     not
     10.Amortization schedules, pass books, and             18. Tax service fees
        membership or entrance fees
                                                            19. The veteran cannot pay for appraisals requested
     11.Escrow fees or charges a.k.a. Loan closing or           by parties other than the veteran or lender.
        settlement fees



35
Where to Get More Information
     3 ways to get the facts:

     1. ONLINE
           http://www.fhaoutreach.gov/FHAFAQ/
           FHA’s online resource center, open 24/7
     2. E-MAIL
           Info@fhaoutreach.com
     3. PHONE
           (800) CALLFHA – (800) 255-5342
           TDD: (877) TDD2HUD – (877) 833-2483
           Open Monday-Friday, 8am to 8pm ET




36
Where to Get More Information
     Other Important Phone Numbers:

     • HUD Approved Counseling Agencies
           (800) 569-4287
     • Loss Mitigation
           (888) 297-8685




37
Where to Get More Information
     Other Websites with information:

     • HUD Home Page
          http://www.hud.gov or, http://www.espanol.hud.gov
     • HUD Knowledge Base
          http://answers.hud.gov
     • Real Estate Broker/Agent Page
          http://www.hud.gov/groups/brokers.cfm
     • HUD Contractor Page
          http://www.hud.gov/offices/hsg/sfh/reo/mm/mminfo.cfm
     • HUD Forms, Handbooks, Mortgagee Letters, etc.
          http://www.hudclips.org



38

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FHA VA Loans What Agents Need To Know

  • 1. These courses are approved for Credit by the California Department of Real Estate. However, this approval does not constitute an endorsement of the views or opinions which are expressed by the course sponsor, instructor, authors, or lecturers. This material is for educational purposes only. In no way should any statements or summaries be used as a substitute for legal or tax advice. It is your responsibility to know and understand DRE rules and regulations concerning licensing and educational requirements. We will be pleased to help answer your questions, but the DRE is the final authority - contact them at 916-227-0931 or visit the DRE’s website at www.dre.ca.gov
  • 3. History of the Program The National Housing Act of 1934 created the Federal Housing Administration, which was established during the Great Depression when the rates of foreclosures and defaults rose sharply. Foreclosures Defaults 3
  • 4. History of the Program This program allowed lower income Americans the ability to afford homes while at the same time being a self supporting government backed loan that allowed banks to lend without the worry of major default 4
  • 5. Help people realize the “American FHA Mission Revitalize Communities Stabilize and Dream” of homeownership Promote Economic Growth Reduce Defaults/Preserve Neighborhoods
  • 6. FHA Goals Educate Consumers to make informed choices Enable individuals to: Simplify the home buying process: Own homes Remove regulatory barriers Build equity in their homes Embrace innovative financing: Provide homeownership and home Down Payment Assistance retention opportunities to under Silent seconds deserved, such as: First time homebuyers Minorities Elderly
  • 7. FHA Myths  Too complicated  Too much paperwork  Too expensive for seller  Higher rates  Mortgage insurance cannot be removed  Takes too long to close  Doesn’t benefit the buyer  Doesn’t benefit the seller  You have to have money to close  Conventional is always a better loan  Buyer can’t understand the loan  Government gets involved 7
  • 8. Conventional vs. FHA Loans Conventional FHA Two months reserves No reserve requirement Minimum 3% down with heavy 3.5% Down Payment Restrictions on FICO , ratios, reserves Heavy restrictions on Gifts Gift funds allowed, encouraged No non-occupant Co-borrowers Non-occupant co-borrowers allowed (kiddie condo) Have Higher qualifying standards Tiered pricing based on FICO Pricing tiered less severely than Conventional Up to $5k medical collections can be unpaid Collections are AUS driven If AUS does not allow ARMS with caps of 5%/2%/5% ARMS with caps of 1%/5% ARMS qualify at 2% above note rate ARMS qualify at note rate 8
  • 9. Conventional vs. FHA Loans Conventional FHA Private MI required (over 80% LTV) Government insured Must have DU/LP approval Loan can be manually approved 4 years out of Chapter 7 2 years after Chapter 7 2 yrs. after payoff on Chapter 13 1 yr. of on-time payments after Chapter 13 7 yrs. after Foreclosure (3 yrs with 3 yrs. After Foreclosure Extenuating circumstances) Minimum 2 yrs after a short sale Possible to purchase one day After a short sale* 9
  • 10. FHA Flexible Credit Guidelines Minimum FICO score is 640* Minimum time after a Chapter 7 Bankruptcy is 2 years (12 Mos minimum with extenuating circumstances-see below) Minimum time period after a Chapter 13 bankruptcy is one year from creditor settlement date with proof of on time payments for that year On Short Sale, it is possible to purchase a home one day after closing* If little credit history is available, alternative credit can be used. Payments on items such a car insurance, Utility bills or Cell phones can be used to create the credit required Minimum time period after a foreclosure is 3 years, unless extenuating circumstances: Death of wage earner Serious Illness Consumer Credit Counseling –must have paid payments on time for 12 mo. *In some exceptional cases, a score lower than 640 may be acceptable 10
  • 11. Down Payment Sources • Borrower must make a 3.5% cash investment* • Borrower’s documented liquid assets (IRA’s or 401K) • Gift from Relative • Gift from Charitable organization, union, public agency, employer or public entity • Secured Loan
  • 12. Gift Funds Acceptable Donors (Donor must show evidence of funds): Relative Close friend w/clear interest in borrower Borrower’s employer or labor union Charitable or Non-Profit organization 12
  • 13. Mortgage Insurance Government Insured Since the Government insures the loan, in a declining market there is less effect on appraisals being chopped than conventional loan insured by a private MI company. FHA only insures mortgages. Up Front MI (UFMIP) Monthly MI To reduce the cost of monthly MI, an upfront cost of 1.0% of the loan amount is added to the The monthly Mi amount to be paid is calculated by cost of the loan. This cost is usually financed* taking the base loan amount and multiplying it by Example: Purchase price is $200,000 .0090 $200k x (.965)=$193,000 (base loan amt.) $193,000 x (.00115)/12 - $184.96 per month.* $193,000 x (1.01) = $194,930 This is the final loan amount, including financed, up front MI. *UFMIP changed to 1.0% and monthly MI.115% 4-18-2011 13
  • 14. Additional Concerns Property must be owner occupied only! No 2nd homes or investment properties Borrower must be a legal resident and must have a valid SS# (T.I.N acceptable) Except for certain circumstances, only one FHA Loan is allowed per family Title can be held in inter vivos trust Available products-203(b) & 234 (c) 30 year Fixed 15 year Fixed 1,3,5,7 and 10 year ARM’s 3-2-1 Buydown 2-1 Buydown Loan Limit – In San Diego County – $546,250 14
  • 15. Additional Concerns Can only have one FHA loan at any time with the following exceptions: Relocation Increase in family size Vacating a jointly owned property Non-occupying co-borrower 15
  • 16. Condominiums 234 (c) Subdivision must be FHA approved Spot approval no longer available Do NOT trust MLS data-verify approval with a reputable Loan Officer 16
  • 17. Underwriting • 4155.1 – Mortgage Credit Analysis • 4155.2 – Lender’s Guide • 4060 –Mortgage Approval Handbook • National Reference Guide www.hud.gov./offices/hsg/sfh/ref/fhaintro.cfm • 245 CFR – Parts 200-499 (Code of Federal Regulations) • Mortgagee Letters 17
  • 18. Investor Overlays Underwriting • HVCC • Not Credit Score dependent • Derogs in last 12 months, with poor credit • Cash saved at home • Commissions from Sale- Family member or Realtor/borrower • Secondary Financing 18
  • 19. Essential Qualities of an FHA Borrower: Underwriting A demonstrated ability to repay their debts and obligations Documentation of income to meet the debts and obligations The ability to close the transaction Sound and acceptable assets 19
  • 20. Underwriting Criteria: FHA’s four C’s • Character (credit) • Capacity (income) • Capital (reserves) • Collateral (value) 20
  • 21. Qualifying Notes 2 Years employment/se lf employment Must be stable Must continue for at least 3 years (Alien Visa) Other verified 21
  • 22. Guidelines for Converting Principal Residence to Rental Implemented to avoid “Buy and Bail”: Both current and new Borrower can document 75% payments will be LTV or lower in Current counted against the Transaction must clearly Principal Residence borrower’s debt ratios, illustrate purchase is NOT and; for investment purposes Relocation – employer Downsizing or upgrading Location 22
  • 23. Non-Purchasing Spouse Credit obligations of the spouse must be included and will be factored in with borrowers credit obligations (debt ratio) and used to determine the financial capabilities of the borrower. Non-Purchasing spouse disclaims 23
  • 24. Appraisal Valuation Conditions These Valuation Conditions and protocol help the appraiser evaluate the standards required by the General Acceptability Criteria. The criteria are described below. It is helpful & facilitates the process if the following items are addressed prior to the appraiser viewing the property. 24
  • 25. Manufactured Housing Must have HUD ID tag (s) Can only have been moved from factory to subject home site once; Must have been manufactured or factory to dealership lot to home site >June 15, 1976 once (cannot be moved from one home site to another) Must be taxed as real property Must have engineer’s certification that permanent foundation meets FHA guidelines Can purchase land and home with one loan
  • 26. Refinancing Streamline Refi without an appraisal: Maximum loan amount based on : 1. Current principal balance. This is a change that is effective November 1, 2009, and makes it much harder to accomplish a streamlined refinance with costs built in. A very significant recent change. 26
  • 27. Refinancing Streamline Refi No credit required Can be with or without an appraisal Restrictions on loan amounts Refund partial old MIP and finance new MIP 95% Cash out Refi, reduced to 85% after 4-1-09 Must own house >12 months Cash out for any purpose Co-borrower can be added for qualifying (must occupy) Limited to 1-2 unit properties, including Manufactured 27
  • 28. Options for the distressed FHA Homeowner Loss Mitigation/Foreclosure Prevention Tools: • Forbearance • Loan Modification • Partial Claim • Short Sale-FHA PFS • Deed in Lieu 28
  • 29. 2 Types of 203(k) Loans Streamlined Standard Most common Known as Rehabilitation/Renovation Mortgage. Less Common – Much more comprehensive Intended to facilitate uncomplicated construction project improvements $5k minimum for repairs, but allows Allows up to $35,000 to be used after closing for for all but one foot of the foundation repairs, which can be part of to be torn down. the improved value (no minimum threshold) Requires a consultant No General Contractor or drawings required Maximum mortgage is lesser of: Does not allow for structural improvements and 1.Maximum FHA limit, or; must use licensed and bonded Sub-contractors* 2.As-Is Value plus cost of rehab, or: *Subs must take ½ draw, finish the job, then get the other 1/2. 3.110% of “after improved” appraised value Controlling the elements of the 203(k) process leads to a successful closing. 29
  • 30. 203(k) Streamline Examples of eligible work under 203(k) streamline: Repair/Replace: 1.Roofs, gutters, downspouts 2.Heating, ventilation 3.Plumbing, electrical systems 30 4.Flooring
  • 31. 203(k) Streamline Examples of ineligible work under 203(k) streamline: 1. Pool & equipment 2. Structural improvements requiring drawings, a general contractor or layered work 3. Relocation of a load bearing wall 4. New construction For more information 5. Room additions on the 203(k) program 6. Repair of structural damage visit:http://www.hud. 7. Work not deemed easily gov./offices/hsg/sfh/2 completed in 6 months 03k/203k--df.cfm 8. Additional living units (if allowed by zoning) 31
  • 32. 203 (k) Setting Expectations • Underwriting Renovation Loans is a two part process:  Expect conditions from both the credit underwriter and the Renovation Lending Dept. And not necessarily at the same time. This product is not for everyone. 32
  • 33. 203 (k) Setting Expectations • Prepare ALL parties involved:  Inform Realtors that you are applying for renovation financing  Be aware of the close of escrow date  Inform contractors of the 10% holdback of draws  Manage your borrowers (buyers)  Allow for longer closing 33
  • 34. VA Loans Also known as “Government”, but quite a bit different than FHA 100% financing with no monthly MI to $700,000 Funding Fee (per Circular 26-11-12, as of October 1, 2011, with less than 5% down payment): 1.40% - Active or first time use 1.65% - Active Reserve or Guard Duty 2.80% - Subsequent Use (until October 1, 2012) Appraisal must be performed by VA approved appraiser
  • 35. VA Loans What Fees can the Veteran NOT pay? The following list provides examples of items that cannot be charged to the veteran as "itemized fees and charges." 1. Lender's appraisals (reviews) 12. Notary fees 2. Lender's inspections, except in construction loan 13. Commitment fees or marketing fees of any cases secondary purchaser of the mortgage and 3. Loan closing or settlement fees preparation and recording of assignment of mortgage to such purchaser 4. Document preparation fees 14. Trustee's fees or charges 5. Preparing loan papers or conveyance fees 15. Loan application or processing fees 6. Attorney's services other than for title work 16. Fees for preparation of truth in lending disclosure 7. Photographs statement 8. Interest rate lock-in fees 17. Fees charged by loan brokers, finders or other 9. Postage and other mailing charges, stationery, third parties whether affiliated with the lender or telephone calls, and other overhead not 10.Amortization schedules, pass books, and 18. Tax service fees membership or entrance fees 19. The veteran cannot pay for appraisals requested 11.Escrow fees or charges a.k.a. Loan closing or by parties other than the veteran or lender. settlement fees 35
  • 36. Where to Get More Information 3 ways to get the facts: 1. ONLINE  http://www.fhaoutreach.gov/FHAFAQ/  FHA’s online resource center, open 24/7 2. E-MAIL  Info@fhaoutreach.com 3. PHONE  (800) CALLFHA – (800) 255-5342  TDD: (877) TDD2HUD – (877) 833-2483  Open Monday-Friday, 8am to 8pm ET 36
  • 37. Where to Get More Information Other Important Phone Numbers: • HUD Approved Counseling Agencies  (800) 569-4287 • Loss Mitigation  (888) 297-8685 37
  • 38. Where to Get More Information Other Websites with information: • HUD Home Page  http://www.hud.gov or, http://www.espanol.hud.gov • HUD Knowledge Base  http://answers.hud.gov • Real Estate Broker/Agent Page  http://www.hud.gov/groups/brokers.cfm • HUD Contractor Page  http://www.hud.gov/offices/hsg/sfh/reo/mm/mminfo.cfm • HUD Forms, Handbooks, Mortgagee Letters, etc.  http://www.hudclips.org 38