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On Behalf of HUD & FHA Welcome to our session on an Overview of HUD/FHA Programs

On Behalf of HUD & FHA Welcome to our session on an Overview of HUD/FHA Programs. 1. Housekeeping Phone lines ~ Q&A ~ Polling Activities. Phone lines – muted Questions – chat panel Interactivity – voting tools and polling questions. 2. FHA Subject Matter Expert .

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On Behalf of HUD & FHA Welcome to our session on an Overview of HUD/FHA Programs

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  1. On Behalf of HUD & FHA Welcome to our session on anOverview of HUD/FHA Programs

    1
  2. Housekeeping Phone lines ~ Q&A ~ Polling Activities Phone lines – muted Questions – chat panel Interactivity – voting tools and polling questions 2
  3. FHA Subject Matter Expert Welcome to our guest from the FHA who will be responding to participant questions and offering additional guidance during today’s webinar. 3
  4. Your Instructor Judy Nash-Ellis 4

  5. Overview of HUD/FHA Programs

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  6. Polling Questions How long have you been in the mortgage industry? What is your position or primary responsibility? 6
  7. Overview Create awareness of the various FHA programs. Cover general purpose of the following programs: 203(b) Mortgage Insurance ARMs Interest Rate Buydowns HUD REOs Good Neighbor Next Door Energy-Efficient Mortgage or EEM 203h Disaster 203k Rehabilitation and 203k Streamline. You will gain an overview of the key features of these programs, why they were created, and how they fit into HUD's mission.  7
  8. Course Objectives Identify HUD/FHA Program market share. Recognize HUD's mission. Describe what FHA is, what it provides and how FHA is funded. Identify the purpose and features for each program. 8
  9. Why FHA Programs? Portion of the Market: Purchases - Existing and New Homes (1-4 Family) Purchases - New Homes Only Total Dollar Volume of Housing Represented 9
  10. Portion of the Purchase Market New and Existing Homes vs. New Only 10
  11. Total Housing $ with FHA Purchase Loans 2006 $39B 2007 $39B 2008 $118B 2009 $171B 2010 $183B 2011 $130B Reference: http://portal.hud.gov/hudportal/documents/huddoc?id=fhamkt0112.pdf 11
  12. Portion of the Market - Summary Market Share: All Purchases 14.63% (2011) New Home Purchases 23.57% (2011) Total Housing $130B (2011) 12
  13. Do You Have Any Questions? 13
  14. History of FHA Why was FHA Created/What it served? 1934 - Created the National Housing Act. 1965 - Federal Housing Administration became part of the Department of Housing and Urban Development (HUD). How does it continue to serve today? Reference: http://www.census.gov/newsroom/releases/archives/2010_census/cb11-cn188.html 14
  15. HUD’s Mission Create affordable homes for all. Work to strengthen the housing market. Bolster the economy and protect the consumer. Improve quality of life for all, free from discrimination. Reference: http://www.hud.gov/offices/adm/about/admguide/history.cfm 15
  16. What is FHA? What is FHA? What does FHA provide? Why does FHA Mortgage Insurance exist? How is FHA funded? Reference: http://portal.hud.gov/hudportal/HUD. 16
  17. 203(b) Program Purpose of 203(b) Mortgage Insurance Program: Provide mortgage insurance for a person to purchase or refinance a principal residence: Protects theLender Mortgage Insurance Elements. Examples of eligibility requirements: FHA Credit Requirements Eligible properties are 1-4 unit properties, including Condominiums, PUDs, manufactured homes, townhomes, row houses, detached and semi-detached houses. Reference: HUD Handbook 4155.2 Chapter 2 at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4155.1. 17
  18. What can you use a 203(b) loan to do? Purchase Refinance - Rate/Term Refinance - Cash Out Streamline Refinance - Non-Credit Qualifying Streamline Refinance - Credit Qualifying 18
  19. Property Types 1-4 Family Units Condo PUDs Manufactured Detached and Semi-detached Townhomes and Row Houses Reference: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4150.2 19
  20. 203(b) Program - Summary FHA National Housing Act FHA Insurance: Protects the Lender Credit and property requirements apply Variety of purchase programs, 96.5% LTV Variety of refinance programs: Rate and Term 97.75% LTV Cash out Refinance 85% Streamline Refinance, Principal Amount 20
  21. 203(b) Program - Example PP $100,000 DP 3.5% UFMIP for example 1.75% ($1,688.75) Loan Amount ($96,500 + $1,688) Monthly MIP (Annual) Seller Concessions up to 6% Closing costs and prepaids, not down payment 21
  22. Acceptable Sources of Borrower Funds Savings/Checking Cash saved at home Savings Bonds 401(k) and Keogh Accts Sale of personal property Charitable organizations Government of public agencies Employer funds Gift Funds - Family Member or close friend (see the handbook for important details) Specific Underwriting Rules apply and can be found in the 4155.1 Chapter 5 22
  23. Adjustable Rate Mortgage (ARM) Types of FHA ARMs available: One Year 3, 5, 7, 10 Year (Hybrid) Reference: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4150.2 23
  24. ARM Interest Rate Cap Structure 1, 3, 5 Year: Annual 1% Life 5% 5, 7, 10 Year: Annual 2% Life 6% 24
  25. ARM Qualifying Rate 1 Year - Start rate plus 1% 3, 5, 7, 10 Year - At start rate 25
  26. Polling Questions 1. What rate should you use to qualify a borrower for a 1-Year Arm? 2. What about a 3,-5,-7, and 10-Year Arm? 26
  27. Temporary Interest Rate Buydowns Purpose of Buydowns: Reduce the borrower’s monthly payment during the early years of the mortgage Permitted on: Purchase transactions Fixed-rate mortgages Source of Buydown Funds Reference HUD Handbook 4155.1. 27
  28. Temporary Interest Rate Buydowns Example: 3-2-1 Buydown 1st Year 3% $422.00 (600-422=178) 2nd Year 4% $477.00 3rd Year 5% $536.00 4th Year 6% $600.00 28
  29. HUD Real Estate-Owned Properties What is a HUD REO property? Appraisal requirements: Original HUD appraisal is used Customer is not charged for the appraisal Reference: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/reobuyfaq. 29
  30. HUD Real Estate-Owned Properties Use an FHA Mortgage to Purchase a HUD REO? Property classifications: Insured Insured with repair escrow Uninsurable 30
  31. HUD Real Estate-Owned Properties 31
  32. Good Neighbor Next Door - HUD REO Properties What is the Good Neighbor Next Door (GNND) program and who is eligible? Down payment requirements. How long does the borrower(s) have to live in the property? Where are GNND properties located? References: http://hudhomestore.com/HudHome/Index.aspx http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/goodn/gnndabot. 32
  33. HUD Real Estate-Owned Properties Summary HUD remarkets homes acquired through foreclosure. Insured properties may be purchased with an FHA 203(b) mortgage. Insured with Escrow properties may be purchased with a 203(b) mortgage. Uninsured are not eligible for any financing except a 203(k) mortgage. Must meet program requirements. Good Neighbor Next Door Program can be used on a HUD REO. Special forms and rules apply for the Realtor and Lender. 33
  34. Energy Efficient Mortgages (EEM) EEM’s Purpose: Helps incorporate the cost of energy efficient improvements into a mortgage Saves money on utility bills References: HUD Website http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/eem/eemhome http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/eem/energy-r. 34
  35. Energy Efficient Mortgages (EEM) Cont’d… Energy Efficient Improvements can include: Weatherization: Energy-related weatherization Solar: Passive and active solar technologies Reference: Handbook 4155.1 Chapter 6 Section D 35
  36. Energy Efficient Mortgages (EEM) Cont’d… The borrower does not have to qualify for the additional (EEM) funds or make additional down payment. Ratios for the program can be “stretched” to 33/45. The Energy Package must be included in the file. HERS audit report. Reference: http://portal.hud.gov/hudportal/documents/huddoc?id=eemcrossreftips7.25.10.pdf. 36
  37. EEM Calculator Where is the calculator located? How is the financing determined? The dollar amount of cost-effective energy package. The lesser of 5%: The appraised value of the property. 115% of the median area price of a single family dwelling. 150% of the conforming Fannie Mae/Freddie Mac limit. 37
  38. Polling Questions 1. What is an EEM?2. Does the EEM Program offer 100% financing? 38
  39. Section 203(h) for Disaster Loans Purpose: Helps victims in Presidentially designated disaster areas recover by making it easier for them to get mortgages. Types of Assistance: Provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified disaster victims. No down payment is required. The borrower is eligible for 100 percent financing. Eligibility: Anyone whose home has been destroyed or severely damaged in a Presidentially declared disaster. 39
  40. Section 203(h) for Disaster Loans Cont’d … Do you have to purchase in the same location as the disaster? What are the guidelines for the program? Examples of proof of destruction. Guidelines on credit issues. Do you have to be a homeowner? References: HUD Handbook 4155.2 Chapter 1, Section C http://portal.hud.gov/hudportal/documents/huddoc?id=4155-2_1_secC.pdf 40
  41. 203(k) Rehabilitation Mortgage Insurance Streamline 203(k) Mortgage: Loans save borrowers time and money. Quickly and easily tap into cash to pay for property repairs or improvements. 203(k) Mortgage Program: HUD's primary program for the rehabilitation and repair of single family properties. Minimum $5,000 repair threshold must be met (not applicable to Streamline 203(k)). References: HUD Handbook 4155.2 Chapter 1, Section C and HUD Website http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kabou. 41
  42. 203(k) Vs. 203(k) Streamline - Summary 203(k): Minimum $5k Can be structural HUD REO incl. lead-based paint abatement, EEM 203(k) Streamline: No Minimum. Maximum $35k Non-structural HUD REO incl. lead- based paint abatement, EEM Reference: Mortgage Letter 2005-50 42
  43. What Have You Learned? You can state HUD/FHA Program market share. Describe HUD's mission.  Describe what FHA is, what it provides and how FHA is funded. Identify the purpose for each program. 43
  44. Questions 44
  45. Reminders: Recorded version of the Overview of HUD/FHA Programs webinar will be available on the HUD website. Overview of HUD/FHA Programs webinar FAQs will be available on HUD website. Resources: HUD Handbooks 4155.1 and 4155.2. TOTAL Scorecard User Guide. FHA’s Knowledge Base. Call FHA at (800) CALL FHA or email at answers@hud.gov Next Steps & Resources 45
  46. We look forward to your participation in other training events. Other FHA Programs include: FHA Energy Efficient Mortgage (EEM) FHA Condominium Approval Process Credit Underwriting – Loan Calculations Credit Underwriting – Borrower Analysis Fundamentals of DE Credit Review & TOTAL Scorecard FHA Home Equity Conversion Mortgage (HECM) FHA 203(k) Rehabilitation Mortgage Insurance Program Home Mortgage Insurance for Disaster Victims 203(h) Fundamentals of Insurance Endorsement Program Requirements for FHA Appraisals Reviewing Appraisals in Today’s Market How to Manually Underwrite an FHA Mortgage Thanks for attending this course! 46

  47. Overview of HUD/FHA ProgramsThank You!

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