FHA changes you need to know about!

FHA Implements Minimum Credit Scores

On September 3, 2010 Mortgagee Letter 10-29 was released. This mortgagee letter establishes minimum credit scoring requirements for all standard FHA programs* and is effective for case numbers assigned on or after October 4th, 2010.

Here are the 4 things you need to know about these changes:

1.       Borrowers with a minimum credit score at or above 580 ARE eligible for maximum financing.

2.       Borrowers with a minimum credit score between 500 and 579 ARE limited to a 90% LTV.

3.       Borrowers with a minimum credit score of less than 500 are NOT eligible for FHA-insured mortgage financing.

4.       Borrowers with a non-traditional credit history or insufficient credit are eligible for maximum financing BUT must meet the underwriting guidance in HUD 4155.1 4.C.3. 

*Please note that these new requirements DO NOT apply to:Title I, Home Equity Conversion Mortgages; HOPE for Homeowners; Section 247; Section 248; Section 223(e), Section 238.

FHA MIP Changes Now Official

With the passing of H.R. 5981 and the resulting Public Law 111-229, FHA was given authority to change the amount charged to borrowers for both the Up Front and the Annual premiums. These changes as outlined in Mortgagee Letter 2010-28, are effective for all case numbers assigned on or after October 4th, 2010.

Here are the 6 things you need to know about these changes:

1.       The Up Front premium is now 1.0 % for all standard FHA programs (purchase money mortgages, full credit-qualifying refinances, streamline refinances)
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2.       The Annual premium is now .90% for LTVs GREATER than 95% on 30 year loans

3.       The Annual premium is now .85% for LTVs EQUAL to or LESS than 95% on 30 year loans

4.       The Annual premium is now .25% for LTVs GREATER than 90% on 15 year loans

5.       The Annual premium is now .00% for LTVs EQUAL to or LESS than 90% on 15 year loans

6.       These premiums apply to purchases, regular refinances and streamlines

Please note that this new law also gives FHA the authority to raise the Annual premium at will up to 1.5% for LTVs at or below 95% and 1.55% for LTVs more than 95%.

Click here to read Mortgagee Letter 2010-28 in its entirety.

FHA Eliminates Unlimited CLTVs for Refinance Transactions

This update from Mortgagee Letter 2010-24 contains changes to the new maximum CLTV limits for refinance transactions, which will be effective for case numbers assigned on or after September 7, 2010.

The combined amount of the FHA-insured first mortgage and any subordinate lien may not exceed the applicable FHA LTV AND the geographical maximum mortgage amount (does not apply to streamline refinance transactions).

Here are the 4 Maximum CLTVs for Refinance Transactions that you need to know about:

1.       Rate and Term (or No Cash Out) Refinances = 97.75%

2.       Refinances for Borrowers in Negative Equity Positions* = 115%

3.       FHA-to-FHA Streamline Refinances With or Without Appraisals = 125%

4.       Cash-out Refinances = 85%

* This refinance option is only available through December 31, 2012. Read Mortgagee Letter 2010-23 for more information.

For more information, read Mortgagee Letter 2010-24 in its entirety.

 

 

 

Thank you,

 

Edward Deanes

 

 

This information is accurate as of the date posted and is subject to change without notice. All of the views and comments are mine and do not represent Wells Fargo.