A Message from HUD

What is happening today in mortgage lending:
Four Messages for FHA Lenders:



1. FHA Industry Call: Maximum Mortgage Calculation:



Wednesday, January 28th at 2 pm, FHA will provide a comprehensive review of the maximum mortgage calculation for all mortgage products, including purchase loans, all types of refinances, and 203(k). Materials will be provided the week of the call. The call-in number is 202-866-207-0413 and the ID number is 81608101.



2. 203(k) and Streamlined (k) Maximum Mortgage Calculation Clarification:



The new cash investment requirements for all FHA case numbers assigned on or after January 1, 2009 also applies to the calculation of the loan amount for Section 203(k) and Streamlined (k) loans. Until the new 203(k) Maximum Mortgage Worksheet, form HUD-92700 is posted, please use the following guidance to modify the existing worksheet. As stated in Mortgagee Letter 2008-23, the Loan-to-Value (LTV) for 203(k) loans may exceed 100% of the appraised value. Modifications have been made to the existing worksheet and will be posted upon completion of the clearance process.



“Form HUD-92700 203(k) and Streamlined (k) Maximum Mortgage Worksheet:



Mortgage Calculations for Purchase Transactions (Section C)



Line C1 stays the same

Line C2 stays the same

Line C3 stays the same

Line C4:

Mortgage Amount = Sum of C3 +(-) Required Adjustments (Note 4) ($__________)

LTV Factor (96.5%) (Owner-Occupant) or Less Allowable Down Payment/HUD Owned Property ($__________) (Note 5)

Line C5:

Statutory Investment Required (C3 x 3.5%)

Line C6:

Actual Cash Investment Required (C3 + A5 minus C4 ($__________) (This figure must be equal to or greater than C5; if less, an adjustment must be made to C4 to ensure a 3.5% investment
Mortgage Calculations for Refinance Transactions (Section D)

Line D1 stays the same

Line D2 stays the same

Line D3: D2 ($__________) x LTV Factor (97.75%) (Owner-Occupant)

Line D4: Maximum Mortgage Amount is the Lesser of D1 or D3 (Note 5)

Line D5 stays the same”

3. Clarification to Requirements of Mortgagee Letter 2008-40: Cash-Out Refinance Transactions:

On page 5, all of the requirements listed under the heading “Additional underwriting and eligibility criteria” are applicable to all cash-out refinance transactions where the LTV exceeds 85%.

4. Streamlined Refinance Transactions at 2008 Economic Stimulus Loan Limits:

FHA will permit loans originated under the 2008 loan limits to be refi-ed at mortgage amounts that exceed the current 2009 (and future) geographic loan limits. For streamlines with appraisals or full refinances, the mortgage amount may exceed the current geographic limit so long as:

the new loan amount (without MIP) does not exceed the prior case loan amount and
the new appraised value supports the loan amount and the LTV is not greater than 97.75%.

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com