Pleasanton Real Estate

Fri, 2011-08-19 16:48 — NationalMortgag…

The Federal Housing Administration (FHA) will implement new single-family loan limits as specified by the Housing and Economic Recovery Act of 2008 (HERA) as of Oct. 1, 2011. According to Mortgagee Letter 11-29, FHA will reduce loan limits in the highest cost metropolitan areas of the country, while limits would remain unchanged in most other parts of the nation. 

These new loan limits were scheduled to take effect in January of 2009, but continuing strains in credit markets led the Congress to delay implementation. The result has been nearly three years of higher loan limits for some areas based on the Economic Stimulus Act of 2008 (ESA).

Barring any new action by the Congress, many affected areas will have lower FHA loan limits come Oct. 1. The current standard (floor) loan limit for areas where housing costs are relatively low will remain unchanged at $271,050 for one-unit properties. The new “ceiling” loan limit for higher cost areas will be reduced from $729,750 to $625,500 for one-unit properties. FHA loan limits vary based on area median home price, but all will fall within the range of $271,050 and $625,500 for one-unit properties. Additional information and loan limits for two-, three- and four-unit properties are noted in FHA’s Mortgagee Letter 11-29. As in previous years, Alaska, Hawaii, Guam, and the Virgin Islands may have higher loan limits.

FHA estimates that only a fraction of borrowers living in the nation’s highest cost areas will be impacted by the new loan limits announced today. For example, last year only three percent of FHA-insured borrowers lived in these high-cost areas. The change in FHA loan limits will affect 669 counties across the country, out of a total of 3,234 jurisdictions in which FHA insures home loans. Most loan applications with an FHA case number assigned on or after October 1, 2011, will be subject to the new limits. However, there are some exceptions for FHA-insured to FHA-insured refinances that are noted in HUD’s Mortgagee Letter. In addition, there are exceptions for loans that were issued case numbers on or before Sept. 30, 2011 and meet all of the credit approval criteria detailed in Mortgagee Letter 2011-29.

The mortgage loan limit and maximum claim amount for FHA-insured reverse mortgages will remain unchanged. FHA’s Home Equity Conversion Mortgage (HECM) will continue to have a maximum claim amount of $625,500.

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Compliance NMP News Originations Residential Reverse Federal Housing Administration (FHA) Economic Stimulus Act of 2008 (ESA) Home Equity Conversion Mortgage (HECM) Housing and Economic Recovery Act (HERA) loan limits median home price Mortgagee Letter 11-29

In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.

Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.

Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.

This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.