New and Proposed FHA & VA Changes

By rchrisman@robchrisman.com

"I very quietly confided to my best friend that I was having an affair. She turned to me and asked, 'Are you having it catered?' And that, my friend, is the definition of OLD!" Research by the EBRI on retirement finds while 67% of workers plan to work for pay in retirement, only 27% of retirees do so. Of the retirees who worked, the reasons included wanting to stay active and involved (82%), enjoy working (80%), wanting money to buy extras (57%), need money to make ends meet (51%), a decrease in the value of their savings or investments (43%), and to keep health insurance or other benefits (32%).

On the topic of mortgage company approvals, Dr. Rick Roque (413-297-6895) writes, "It is next to impossible to find a good deal on a Full Eagle today, because owners tend to over value them, while buyers tend to under appreciate the time, test cases and approval process to secure the Full Eagle / HUD Designation. Depending upon the state, sometimes it is easier to buy a small full eagle platform in order to secure the state license, than it is to apply for a state license and wait - California and New York are two states that come to mind!". Dr. Roque makes a very good point given the wait times in these states that can exceed 9-16 months in order to get a company licensed. 

(Along those lines, for lenders who are interesting in buying a completely clean, Full EAGLE/HUD Designation that is for sale for approximately $350K, with a small staff maintaining the license in CALIFORNIA that is looking to be sold asap; the entity is a wholly owned subsidiary and due to a change in strategy is no longer needed. If you are looking for immediately licensing in California and a Full Eagle, principals and agents are encouraged to confidentially send me a note of interest - and please specify opportunity.

 

Upcoming events?  

 

Essent invites you to join them as they host a live webcast June 2^nd at 1PM EDT to discuss the bearing upcoming elections may have on the Mortgage Industry.  In the 60-minute webcast, Matt Tully, Essent's VP of Government and Industry Relations at Essent will share his insights and perspective on:  recent developments in housing finance reform, potential power shifts in the House, Senate and White House as well as what these shifts may mean to our industry in 2017 and beyond. Prior to joining Essent, Matt worked on Capitol Hill as the Chief of Staff to Arizona Congressman David Schweikert. Please register to attend, as space is limited.

 Did you hear the one about The $25 million jury verdict against Guaranteed Rate involved common hiring practices? Lenders should be aware and valuate its hiring practices. In Texas the TMBA is providing a free webinar on June 15^th featuring Ari Karen and Daniella Casseres, attorneys from the Offit Kurman Financial Institutions Regulatory Practice Group. In order to register online, log into your "My TMBA" profile. Click on the "Events" link (top right), select the event and register. (If you don't have a TMBA profile, please email Tonisha Williams to setup your account.)

 Have you registered for the Michigan Mortgage Lenders Association's (MMLA) August 7^th-9^th Lending Conference?

 I am sure conferences around the country are discussing the future of the FHA program, especially with Wells and Chase following Freddie and Fannie with low LTV products at the retail level.

 FHA published its Home Equity Conversion Mortgage (HECM) proposed rule, Strengthening the Home Equity Conversion Mortgage Program (FR-5353-P-01), in the Federal Register. This is a milestone step for FHA in its efforts to ensure the continued viability of its HECM program. The proposed rule updates the regulations (24 CFR Parts 30 and 206), consolidating all HECM regulations into one document for public comment with the intent to: Codify previously implemented requirements; Propose new requirements that reflect FHA's need to manage the risk to the Mutual Mortgage Insurance Fund, while maintaining the program in a manner that assists seniors in using the HECM program to access the equity in their homes; Propose clarifications and corrections to existing HECM regulatory language; and Replace certain references in 24 CFR Part 203 by incorporating those requirements in 24 CFR Part 206.

 So yes, the FHA has set out new rules to formalize recent improvements. The goal is to strengthen its Home Equity Conversion Mortgage (HECM) Program. "In addition to formalizing many of the structural improvements announced recently, FHA's proposed rule is intended to make certain FHA-insured reverse mortgages remain a viable and sustainable resource for senior homeowners hoping to remain in their homes and age in place.

 In the past two years, FHA implemented several reforms to improve its HECM Program. These new changes would make certain that required HECM counseling occurs before a mortgage contract is signed. It would require lenders to fully disclose all HECM loan features, cap lifetime interest rate increases on HECM Adjustable Rate Mortgages (ARMs) to five percent, and reduce the cap on annual interest rate increases on HECM ARMs from two percent to one percent.

 The list of potential changes goes on. It would require lenders to pay mortgage insurance premiums until the HECM is paid in full, foreclosed on, or a Deed-in-Lieu (DIL) is executed rather than until when the mortgage contract is terminated. It would include utility payments in the property charge assessment, and create a "cash for keys" program to encourage borrowers to complete a DIL and gracefully exit the property versus enduring a lengthy foreclosure process.

 Those active in that lending product remember that since the passage of the Housing and Economic Recovery Act of 2008 and the Reverse Mortgage Stabilization Act of 2013, the FHA implemented several reforms to its HECM Program. It has limited initial withdrawals to ensure the financial stability of the program, for example, and developed criteria to allow certain non-borrowing spouses to remain in the home following the death of their borrowing spouse. It has also expanded home retention options that mortgage servicers can offer to senior borrowers who have failed to pay property taxes and hazard insurance premium payments, and required financial assessments for HECM borrowers to help to make certain their reverse mortgage is sustainable in the long term (i.e., to ensure senior borrowers have adequate income to cover routine property maintenance, pay property taxes, etc.).

 As noted last week, American Advisors Group (AAG) has released its jumbo reverse mortgage loan, called the AAG Advantage, to its wholesale partner network in California. With AAG Advantage, California brokers and loan officers may originate reverse mortgages through AAG on properties valued at up to $6 million, versus the FHA loan limit of $625,500 associated with a traditional Home Equity Conversion Mortgage (HECM) loan.

 NewLeaf has announced FHA and VA enhancements that impact qualifying credit scores and Manufactured Housing eligibility requirements. Refer to page 9 on its Rate Sheet and to its Product Matrices for complete details.   

 On May 10 the FHA implemented a JavaScript update for the 203k Calculator function in FHA Connection and available online via HUD.gov. Depending on how their Internet browser is configured, some users may need to clear their Internet browser's cache in order for the changes to take effect. (To clear cache in Internet Explorer: Click the gear icon in the upper right corner and select "Internet Options."  From the Internet Options dialog box click the "Delete..." button in the "Browsing history" section of the "General" tab.  Ensure "Temporary Internet files and website files" is selected and click "Delete.")

 AmeriHome will be updating it seller guide to reflect changes to its FHA Standard and FHA Streamline Refinance in accordance with FHA's published Info #16-15 on March 14^th which provided updates to SF Handbook on technical updates and revisions to existing policy.

 Pacific Union Financial updated its Program Guide in reference to Conventional LP productsto reflect a minimum 620 credit score regardless of possible LP approval at a lower credit score. It has also been updated to reflect the agency seller contribution limit for loan with LTV/CLTV ≤75%. In addition, its FHA Program Guide was updated to indicate that premium pricing may be used to pay HUD's required Upfront Mortgage Insurance Premium (UFMIP). Pacific Union has also provided an updated example within the Early Payment Default policy to define the timeline for a loan in default to be in line with HUD's definition of 30 days. For the purpose of determining the date of default and timelines related to default, HUD considers all months to have 30 days. For non-delegated correspondents, Pacific Union is easing its tax return verification requirements. Additionally, the following changes are effective immediately on Conventional and Government Products: A Record of Account (ROA) is no longer required for transcripts. W2 transcripts are permitted for wage earners/salaried borrowers. Copies of tax returns will continue to be required as per AUS/Manual requirements. Note: Non-Agency investors continue to require full tax return transcripts; therefor there is no change to the policy for these products. Refer to the applicable Program Guide for requirements.

 Greystone'sFHA lending group closed 13 HUD-insured loans in the month of April, including a $19 million 221(d)(4) loan to fund the acquisition and rehabilitation of a 190-unit affordable housing property in Nashville, TN. Greystone closed this loan in under six months from engagement to closing and provided an early rate lock at the time of engagement in order to mitigate the client's concerns regarding interest rate volatility.

 A recent VA communication announced changes to appraisal fees and appraisal timeliness in Alabama, Florida, Mississippi, Puerto Rico, and the U.S. Virgin Islands. The new fee schedule will be effective on September 1, 2016, to allow program participants the opportunity to adjust to the new fee schedule. The current fee and timeliness schedule can be viewed here and will be in place through August 31.  

 Yes, we're all coming off a 3-day weekend. Looking back to the end of last week, we had some conflicting news: core capital goods orders fell 0.8% m/m in April, more than offsetting a 0.7% upward revision to March's change, perhaps reflecting continuing sluggish business investment. On the other hand, pending home sales jumped to a 10-year high and initial jobless claims fell by 10K filers to 268K last week.

 Yes, it is Tuesday already, and the week has a lot of scheduled news for only four business days. Today we've already had Personal Income and Consumption (+.4%, +1%), and a series of PCE figures - the Fed's favorite measure of inflation (all indicating tame inflation). Coming up is a series of S&P/Case-Shiller housing price numbers from back in March, the Chicago Purchasing Manager's survey, and Consumer Confidence. Tomorrow is the usual MBA's application numbers for last week, some Institute of Supply Management numbers, Construction Spending, and the Fed's Beige Book reporting on the various Fed districts. Thursday June 2^nd will be the Challenger Job Cuts, ADP Employment change, and Initial Jobless Claims. Friday we'll see the trade balance figures, Factory Orders, Durable Goods, and the whole slew of employment data (unemployment rate, hourly earnings, and nonfarm payroll).

 For folks trying to guess where rate sheets might be this morning, we had a 1.85% close on the 10-year yield and this morning, after a few initial numbers, it is at 1.88% and current coupon agency MBS prices are worse a solid .125.