In a market as volatile as the Mortgage Bond market Interest Rates can move in the blink of an eye. One of the tools we use to guarantee that you enjoy the lowest market rate is called a FLOAT DOWN LOCK. The Float Down Lock allows us to lock you in at a certain interest rate. In the event that the market improves and interest rates go down prior to closing, the Float Down allows us to lower your rate even though it is locked!

How will these changes really change things?

• 1. Raising the upfront Mortgage Insurance Premium – This change doesn’t directly make it more difficult for a buyer to get qualified yet it does provide additional capital for the ailing FHA insurance fund. Higher MIP simply raises the amount of insurance charged (as MIP) and rolled into the loan at the time of purchase. The only time this affects someone qualifying is if they were at the very tip top of the allowable debt to income ratio and the increased total loan amount pushed them over. The change takes the current 1.75% MIP up to 2.25% MIP. A Mortgagee Letter (FHA’s way of making official changes) is set to be released tomorrow making this change effective this coming spring.
• 2. Increasing Down Payment in relation to Minimum Credit Score – FHA is considering creating a relationship between FICO score and down payment. This change may give borrowers with scores below the current 620 limit an option to buy as long as they can put 10% down. Look for specific details in February and look for the changes to take place this summer.
• 3. Reducing the amount a seller can pay for a buyers closing costs – Right now a seller can pay up to 6% for an FHA buyers closing costs. The new rules will likely limit this to 3%. At the end of the day this should have relatively no impact on buyers. The exception being buyers under the $100k mark as sometimes total settlement charges can exceed the 3% of sales price. This effort is aimed at reducing sales price inflation to cover extraordinary closing costs.

All of this comes as no surprise. FHA market share in the hay day of sub prime mortgages in 2006 was a mere 2%. Today that number is up to around 50% (of all new home loans) nationwide. Increased demand/pressure on FHA’s Insurance fund has raised the concern and need for more strict guidelines according to HUD. Loans originated during 2007 and 2008 continue to be a big part of the problem. Their default rate is near 24%

As always, if you would like more information on Shea Spaces or any new home community out there, please contact me so I can go with you on your FIRST visit to the models. You need buyer representation on any new home purchase.

The new home sales agents work for the BUILDER, NOT you and will look out for their interests.

Do you want to be SMART? Don't buy a new home without me by your side. It doesn't cost you anything!

Good afternoon,

I wanted to share some great news with you as we head into the weekend. Hot off the press, FHA/HUD has just announced that it is relaxing its 90 Flip rule for a period of one year. This waiver is effective for all sales contracts dated on or after February 1, 2010. HUD is waiving the 90 day waiting period which means that homes CAN be sold within 90 days of the date of their prior sale. Here are some of the key details:

1. Applies to private sellers and investors selling their homes

2. Arms length transactions only

3. In cases where the sales price is 20% or greater than the seller’s acquisition, we must justify the increase in value with supporting documentation of renovation, repair and rehabilitation work

a. If no such work was performed the appraiser must provide an appropriate explanation of the increase in property value since the prior title transfer

b. We must order a property inspection and provide that report to the home buyer

For a complete PDF copy of the waiver please click here.


Yes this the real deal! The 90 Day Flip Rule has been waived.

Here’s what to look out for:

1. Make sure sellers can document their investment into the property in cases where price is greater than 20% of their cost/price

2. Make sure the appraiser will be able to document/justify the value. Not to sound like Yogi Berra – if the value is there, it is there so I don’t see this as being an overwhelming challenge. – just make sure comps clearly support list/sales price

Great news! Today our Senators agreed to extend the first time home buyer tax credit of up to $8,000 which was set to expire at the end of November. How long is the extension?

A home buyer will need to contract on a house by the end of April and close escrow by the end of June.

They also will be offering a NEW reduced credit of up to $6,500 to repeat buyers who have owned their homes for at least five years.