Category Archives: Mortgage News

FHA Extends ‘Anti-flipping Waiver’

In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Federal Housing Administration (FHA) Commissioner David H. Stevens extended FHA’s temporary waiver of the agency’s ‘anti-flipping rule.’  The extension is intended to accelerate the resale of foreclosed homes in neighborhoods struggling to overcome possible property abandonment and blight.

With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days.  Early last year, FHA temporarily waived this regulation through January 31, 2011.   On Friday January 28th FHA posted a notice extending this waiver through the remainder of 2011.

This action will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

The extension is effective through December 31, 2011, unless otherwise extended or withdrawn by FHA.

To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver continues to be limited to those sales meeting the following general conditions:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.

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House Extends High Limits for Federal Loans

The House Appropriations Committee approved an extension of the $729,750 loan limits for Fannie Mae, Freddie Mac, and Federal Housing Administration financing in high-cost areas through September 2010.

Without this extension, the loan limits revert at the end of the year to $417,000 in the highest-cost areas.

The spending bill also would extend FHA’s Home Equity Conversion Mortgage reverse mortgage program for seniors. And it provides $70 million to continue pre-purchase counseling for prospective home buyers and counseling for families facing foreclosure.

Get pre-approved now with The Mathews Lending Team of Prosperity Mortgage Company. The Mathews Lending Team has a 100% success rate for all pre-approvals issued!

Already pre-approved, search for your new home now!

Source: Inman News (07/21/2009)

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Monetizing the First Time Home Buyer Tax Credit to pay for closing costs

The Federal Housing Administration had previously announced in early May that First Time Home Buyers would be able to use the (up to) $8,000 tax credit towards the down payment or closing costs of their new home purchase for FHA loans. Later the government revised their position and it looked like First Time Home Buyers would not be able to use the funds in advance.

New guidelines have just been released which now allow First Time Home Buyers to use the tax credit in advance, with the following restrictions:

  1. The monetizing of the tax credit cannot be used for the 3.5% down payment required by FHA. It can only be used for settlement expenses, or additional down payment funds in excess of the 3.5% or to buy down the interest rate.
  2. The funds to monetize the tax credit cannot come from anyone who may have an interest in the transaction – the seller, the lender, the real estate agent, the builder, etc.
  3. The funds to monetize the tax credit CAN come from a family member, any other non-interested party or another finance shop. The limit however is that any finance firm cannot exceed a 2.5% fee (which would limit the interest of any consumer finance agency from participating as an organization to monetize the credit).
  4. A lien cannot be recorded for the monetized finance amount unless the lender is one of the narrowly approved government sponsored non-profits.
  5. Repayment of the advance must come from the buyer – the IRS will still send the tax credit to the buyer and the buyer will have to repay the advance to whomever loaned it.

Have questions about how you can monetize the tax credit, contact us.

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Can buyers use the $8,000 tax credit for down payments?

It was first announced at the National Association of Realtors Mid Year convention in Washington DC last week that the US Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) were quickly releasing guidelines to monetize the $8,000 tax credit for first time home buyers, so that buyers would be able to use the tax credit as a down payment for the purchase of their new home. Shortly after that announcement HUD has revised their position and is still reviewing the option of monetizing the tax credit because of a concern that the monetization program could resemble an illegal practice of seller-funded down payments. The IRS has also mentioned that there are potential tax concerns as well.

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A Helpful Website

Making Housing Affordable

A new website has been created by HUD  can help home owners determine if they are eligible for a refinance of modification on the federal plan.  Visit the website.

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NEW Buy Confident Plan Announced!

Long & Foster® just announced a dramatic new Buy Confident™ Plan designed to help you decide whether now – or later – is the best time to buy, based on your personal situation. It’s a sensible, objective barometer for you amidst all the headlines about “buy now!” and “low rates” and all the chaos associated with today’s economic crisis.

For more information, or to register, click here.

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The New Stimulus Plan: What’s in it for me?

Within the new administration’s stimulus plan is an array of programs to help millions of homeowners refinance or modify their mortgages. The program has “teeth,” but requires everyone to make a contribution. Mortgage investors, servicers and borrowers all have to participate. First and foremost, the plan aims to help reduce the wave of unnecessary foreclosures which will in turn provide greater stability to home prices or at least mitigate the downward pressure of home prices, which will help us all.

Who will qualify for which programs?

If your debt to income ratio — that is —your principal, interest, taxes and insurance on your mortgage exceeds 31% of your gross income, you may be able to get help.

If you are borrower in distress, you may be eligible. First of all, you need to know program benefits apply to those in owner-occupied properties. You must live in the home and it must be your first mortgage.

You’ll also need to be patient. Experts predict a big surge to Fannie & Freddie. But they are being encouraged to act swiftly.

Key components of the plan:

1. Homebuyer Tax Credit – The plan provides for an $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

2. Refinancing – Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. The Refinance program will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage. This will offer assistance to as many as 7 to 9 million homeowners.

3. Foreclosure Prevention/Loan Modification – Many homeowners are struggling to make their monthly mortgage payments either because their interest rate has increased or they have less income. The Modification program will provide them with mortgage payments they can afford. It is designed to help people in a distressed situation now or those that have a chance of falling behind in the foreseeable future due to job loss or a reset on their mortgage.

Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, this program will work in tandem with an expanded and improved Hope for Homeowners program. If you or someone you know is worried about losing their home, visit now. This will assist as many as 3-4 million borrowers.

Important Notes:

*It’s estimated that borrowers will be able to finance up to 105% of the market value. (These loans may be subject to slightly higher interest rates than market.)

Servicers can begin to modify eligible mortgages immediately under the Modification program so that at-risk borrowers can better afford their payments.

Setting a uniform standard to modify these loans will help facilitate the process, and will help these programs go into effect more swiftly. Major Banks and lenders must be on board. Some major banks have already agreed to suspend foreclosure activity until plans go into effect.

Borrowers will need to confirm eligibility through income verification, second liens, credit card bills, recurring debt payments as well as your mortgage payments. So have those documents ready to make sure they can get you into an affordable rate.

Visit for a FAQ and further information on who is eligible.

Again, we are happy to report many homeowners have successfully sold their homes with us over the last four months. We sold more homes in the month of December — typically a slow month, than in any December over years past. We sold more homes in January and February than we have over years past. And we have a record number of settlements scheduled for the month of March.

Any plan that promotes buyers, especially first time home buyers who need the money the most to get started, will have a positive effect on the market; allowing them to invest in their future. The homes that THEY buy will then create new move-up buyers in the market that first needed to get their home sold. To ultimately stimulate and stabilize the economy, housing recovery legislation is the most important first step.


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