
WASHINGTON Aug 6 (Reuters) - The Federal Housing Administration plans on Sept. 7 to raise the cost of loans backed by the agency in an effort to strengthen its cash-strapped balance sheet.
The move follows Senate approval this week of a bill to allow the FHA to nearly triple the annual fees it charges borrowers, although the FHA plans more modest increases at first. The House of Representatives had already approved its version and President Barack Obama is expected to sign the bill this month.
Under the law, the FHA would have the authority to raise annual mortgage insurance premiums -- paid by the borrower over the life of the loan -- to a maximum 1.5 percent.
That is up from the current 0.55 percent maximum, although FHA Commissioner David Stevens has said the premium would rise gradually -- first to 0.85 percent or 0.9 percent, depending on the size of the borrower's down payment.
The new fees are expected to raise about $3.6 billion annually for the FHA.
The FHA, which does not make loans directly, guarantees loans made to borrowers who meet certain restrictions.
As the mortgage crisis unfolded and private lenders began to pull back from lending, the FHA's total volume rose from $54 billion in 2006 to $376 billion in 2009, according to Inside Mortgage Finance, an industry publication.
The FHA's market share of total originations topped 20 percent in the three months through June, more than 10 times the share in 2006, when it was less than 2 percent.
While raising the annual premium, the FHA has said it also plans to lower a separate upfront premium from the current 2.25 percent to about 1 percent to offset the cost of the annual premium. The upfront premium is paid at the time a loan is issued.
Stevens has said it makes more sense for the fees to be paid throughout the life of the loan in the annual premium instead of forcing borrowers to pay them when the loan is made.
New borrowers would pay an average of just under $40 per month more under the new fee structure.
The minimum down payments are still 3.5 percent for most borrowers. Lawmakers struck down a Republican proposal to raise them to 5 percent.
The FHA has capital reserves equal to just 0.53 percent of the value of the thousands of outstanding U.S. home mortgages it insures, well below the 2.0 percent required by law, according to an independent actuarial study released late last year. A new study is expected to be released this fall.
The House has also passed a broader bill to strengthen the FHA's enforcement capabilities. The Senate is expected to consider its version of the broader bill after senators return from their summer recess in September. (Reporting by Corbett B. Daly; Editing by XXX)
From a Trusted Mortgage Lender:
Remember, this is an Average...we have all certainly had ones that took longer than this.
Average close time by bank
Below is a report that gives the average days to close from the day the short sale package was submitted with purchase contract to the bank.
|
Bank |
Days |
|
American Home Mortgage |
123 |
|
ASC (Americas Servicing Company) |
191 |
|
Aurora Loan Servicing |
78 |
|
Bank of America / Countrywide |
165 |
|
Bank of America Home Equity |
181 |
|
Bank United |
120 |
|
Central Mortgage |
48 |
|
Citi Mortgage |
120 |
|
EMC |
143 |
|
Everhome Mortgage |
70 |
|
Fifth Third Bank |
66 |
|
First Horizon (Metlife) |
234 |
|
GMAC |
97 |
|
Home Servicing |
172 |
|
HSBC Mortgage Services |
49 |
|
Indymac |
213 |
|
Mariners Properties |
|
|
Merrill Lynch / PHH Mortgage |
122 |
|
Midland Mortgage |
97 |
|
Regions Mortgage |
115 |
|
Select Portfolio Servicing (SPS) |
85 |
|
Thornburg |
153 |
|
Wamu/Chase Mortgage |
167 |
|
Wells Fargo |
129 |
| Thursday, Jul 1st, 2010 | |
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from our amazing team leader, Ron Donovan:
Beginning June 1 folks, lenders originating mortgages being sold to Fannie Mae
Will have to pull a second credit report just before the loan closes!
The new quality control requirement is designed to prevent a type of mortgage fraud called "shotgunning," (which I've never heard of before) but the guidelines could send lenders on wild goose chases. Will Dillard, a vice president of operations at SettlementOne Credit Corp., a San Diego reseller of credit data, told American Banker that pulling a second credit report would help stop such frauds but that lenders might also waste time checking out false alarms. "If they see another inquiry, Fannie would like to see lenders query those creditors," Dillard said. "If you're at the funding table ready to fund and you see a new inquiry popping up, the question is, do you send your underwriter out...to track down Honda Motor if the borrower is also trying to buy a new car?"
Bottom line is your buyers need to know NOT to buy anything on credit, apply for credit, do ANYTHING with their credit until they close on their new home.