Posted on 1:37 PM by Unknown


The Department of Housing and Urban Development (HUD) has issued its final rule defining a "Qualified Mortgage" (QM) as required by the Dodd-Frank Act.   The new rule, HUD says, builds off of the existing QM rule issued by the Consumer Financial Protection Bureau (CFPB) earlier this year.  Like the CFPB QM the new HUD, which applies only to loans insured, guaranteed, or administered by HUD/FHA will go into effect on January 10.
In order to be a qualified mortgage as defined by HUD as loan must meet the following requirements:
  • Require periodic payments without risky features;
  • Have terms not to exceed 30 years;
  • Limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans (except for Title I, Title II Manufactured Housing, Section 184,Section 184A loans and others as detailed below); and
  • Be insured or guaranteed by FHA or HUD.
HUD's rule establishes two types of QM.  The Rebuttable Presumption QM will have an annual percentage rate (APR) greater than the Average Prime Offer Rate (APOR), the rate for the average borrower receiving a conventional mortgage, plus 115 basis points plus the on-going (FHA) Mortgage Insurance Premium (MIP) rate.  Lenders that offer these loans are presumed to have determined that their borrower meets the Ability-to-Repay standard set out in the Truth-in-Lending Act (TILA) but consumers can challenge that presumption by proving they did not have sufficient income to pay the mortgage and other living expenses.
The second type of qualified mortgage is the Safe Harbor QM.  These loans must have an APR less that that laid out under the formula above for Rebuttable Presumption loans.  This QA type offers lenders the greatest legal certainty they are complying with TILA.  Consumers can still challenge their lender but only on the basis that their loan does not meet Safe Harbor requirements.
HUD has also adopted CFPB's list of transactions that are exempt from the ability-to-repay requirements including Reverse Mortgages; short term (12 months or less) bridge loans, construction to permanent loans, and a list loans available under specialized HUD financing
The new QA rule also covers Title II manufactured housing, Title I manufactured housing and property improvement loans, Section 184 Indian Home Loan Guarantee Program mortgages, and Section 184A Native Hawaiian Housing Loan Guarantee Program mortgages. The rule designates loans insured under these programs as Safe Harbor Qualified Mortgages regardless of upfront points/fees and APR to APOR ratio so as not to interfere with current lending practices until appropriate parameters can be determined

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Posted on 8:30 AM by Unknown


What You Should Know About Pending Home Sales This Month

 

Excerpt

Pending home sales fell in September by -5.60 percent, and were 1.20 percent lower year-over-year. This is the first time in more than two years that pending home sales have fallen below year-earlier readings.

September's reading was below August's reading of -1.60 percent.

 

The National Association of REALTORS®, which released the report, expects lower home sales for the fourth quarter of 2013 and flat sales into 2014. NAR provided good news in its forecast of 10 percent growth in existing home sales in 2013 as compared to 2012.

 

 Pete Wiechert Mortgage Blog

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Posted on 8:19 AM by Unknown


 

The Downside to F.H.A. Loans


By LISA PREVOST

Mortgages insured by the Federal Housing Administration are the go-to product for borrowers who don’t have much cash for a down payment. But the required mortgage insurance premiums have become so costly that some critics argue that the agency is taking advantage of borrowers who have few other options.

One of the most vocal critics is Edward J. Pinto, a resident fellow of the American Enterprise Institute, who calls the terms “predatory” and “abusive.” He argues that the majority of F.H.A. loans are at high risk for default should the economy tip back into recession, but that borrowers have no way of knowing how safe their loans are, because the agency prices all loans the same.

Low-risk borrowers, he said, are overcharged to subsidize those at higher risk. “The consumer who has the very-low-risk loan doesn’t even know he might be better off going through the private sector,” Mr. Pinto said. “They may assume that the government is protecting their interests.” Rest of article: NYTimes.com The Downside to FHA Loans

 

 

Click here to read the full article www.nytimes.com/2013/12/08/realestate/the-downside-to-fha-loans.html?_r=1&adxnnl=1&adxnnlx=1386331942-y/fxAsLza8PnOltUpHjt3w&

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