Delay in FHA Appraisal Requirements; RESPA Update; VA Loan Flipping; Mortgage Apps Down

Cashtration (n): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.

Maybe this is some "ok" news?

In a story that I first noticed here on Mortgage News Daily, enactment of ML 2009-28 ("Appraiser Independence") will be delayed until February 15, 2010. "ML09-28 (originally planned for a January 1, 2010 implementation) has two parts:  a) prohibition of mortgage brokers and commission-based lender staff from the appraisal process, and b) appraiser selection in FHA Connection.  The effective date for both sections of this guidance will now take effect for all case numbers assigned on or after February 15, 2010. This extension will provide FHA and lenders additional time to adjust systems to accommodate the changes... lenders should be aware that the requirement for inputting the appraiser ID and the appraisal assignment date in the FHA Connection case number assignment screen will be removed. Instead, lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Update Screen once the completed appraisal is received by the lender and prior to closing the loan."

In addition, ML 2009-51 ("Adoption of the Appraisal Update and/or Completion Report"), which was slated to start next weekend, is being extended and will now apply to all case numbers assigned on or after February 15, 2010. FHA lenders know that all FHA Mortgagee Letters can be read online at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/

Speaking of government programs and confusion, let's talk RESPA. It seems that many companies are just resigned to putting aside money to write their borrowers a bunch of checks, or argue with investors, for the first several months of 2010. HERE is the perception from the financial press.

GMAC posted a very lengthy update concerning RESPA, to the point where it would be impossible to reproduce in this commentary - go to the source!

Aside from reminding clients that the final RESPA rule, along with the new GFE and HUD-1/1A forms and training guide to begin on 1/1, can be accessed on HUD's website at http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm . GMACB required that the new forms be used starting next weekend. The bulletin goes on to address the GFE disclosure requirements (The loan originator - lender or broker - is required to issue the new GFE form no later than 3 business days after receiving an application or information sufficient to complete an application...no requirement that the borrower sign the GFE.. no GFE disclosure is required if the application is withdrawn or denied within 3 business days of application, etc.) "Except for interest rate dependent charges, the loan originator is bound by the GFE for at least ten business days after the GFE is provided (or longer if so specified by the loan originator). The loan originator may not charge any fee, except for a credit report fee, until after the applicant has received the GFE and indicates an intention to proceed with the loan request." GMAC goes on to discuss the fees, their structure, "allowability", etc. tolerance limitations (divided into three categories: Settlement charges that cannot increase, settlement charges that can increase up to 10%, and charges that can increase without restriction, etc.) As I mentioned, it is best to go the HUD site or view GMAC's bulletin if you're a client.

Your lock desk is aware that things have slowed down. The MBAA confirmed it by coming out with the recent applications data: demand for U.S. home loans fell last week to the lowest level in almost two months. Mortgage applications dropped 10.7% in the week ended December 18, with refinancing down over 10% and purchases down over 11%.

U.S. Bank Home Mortgage Wholesale Division is announcing the implementation of an anti flipping policy for VA loans starting 1/1. "The property Seller must have taken title to the subject property more than 90 days prior to the contract date on the sale of the property to the applicant. Documentation must verify the property seller on the Purchase Contract is "In Title" and Owner." Property sales involving any of the following entities, however, as property seller, are exempt from these seasoning requirements: U.S. Bank or affiliate, HUD, VA, USDA, Fannie Mae, and Freddie Mac, any approved delegated correspondent, or owners as a result of inheritance or divorce. And for cash out transactions, "the applicant must have taken title to the subject property more than 180 days prior to the loan application date." Check with USBHM for the documentation required.

USBHM also reminded clients that any VA loans over the 2010 county limits, but allowed under the 2009 limits, "must CLOSE by December 31, 2009, regardless of when it funds". USBHM has set maximum loan amounts with guaranty /entitlement and cash down payment, requiring a total coverage of 25% in order to have the loan be saleable in the secondary market. (This can be a combination of guaranty and cash.) Loan amounts up to $417,000 must have 25% minimum coverage with full entitlement. Loan amounts from $417,001 to $650,000 must have 30% total minimum coverage which is the total of entitlement and cash down payment. Loan amounts from $650,001 to $1 million must have 35% minimum which is the total coverage of entitlement and cash down payment.

Tuesday did little to make anyone waiting to lock a loan feel "merry." On relative basis to Treasury rates, mortgages did not do well. And it wasn't because of supply, but more because of technical selling and a lack of buyers. Analysts brought up the fact that mortgage securities are somewhat expensive relative to risk-free Treasury securities, once again wondered what will happen if the Fed buying program comes to an end, and reminded us that we're in the middle of the holidays with poor liquidity. (But geez, it isn't like the holidays weren't expected, and the Fed will still be buying $3 billion a day until March.)

Maybe here today, after 3 days of higher rates, we'll see a change.  We've already had some decent numbers from Personal Income and Consumption. Incomes here in the US saw their biggest gain in six months, and consumer spending rose .5% (expected +.6%) for a second straight month in November. The yield on the 10-yr is "down to" 3.71% and mortgage prices are "maybe" .125 better than yesterday afternoon.

Three men died on Christmas Eve and were met by Saint Peter at the pearly gates.

"In honor of this holy season," Saint Peter said, "You must each possess something that symbolizes Christmas to get into heaven."

The first man fumbled through his pockets and pulled out a lighter. He flicked it on. "It represents a candle," he said.
"You may pass through the pearly gates," Saint Peter said.

The second man reached into his pocket and pulled out a set of keys. He shook them and said, "They're bells."
Saint Peter said, "You may pass through the pearly gates."

The third man started searching desperately through his pockets and finally pulled out a pair of women's panties.

St. Peter looked at the man with a raised eyebrow and asked, "And just what do those symbolize?"

The man replied, "These are Carols."