FHA Reverse Mortgage Changes
By Sarah C. Young, Megan Booth
IN THE NEWS
By Kenneth Trepeta, Charles DawsonJune 6, 2014
On Thursday, June 5, 2014, NAR submitted comments on the Consumer Financial Protection Bureau's (CFPB) proposal to implement a limited cure provision for loans that exceed the 3% cap on fees and points under the Qualified Mortgage (QM) safe harbor. If the cap is accidentally exceeded, a lender may rebate the excess to a consumer within 120 days and the loan will then qualify for the QM safe harbor. NAR supported the cure provision with some simplifications and encouraged the CFPB to implement one for loans that exceed the 43% debt to income (DTI) cap. NAR also encouraged CFPB to put oral guidance on 3% issues in writing as well as fixing the discrimination against affiliates in the calculation of fees and points. A final rule is expected later in the year.
By Sarah C. Young, Megan BoothJune 20, 2014
On June 18, 2014, the Federal Housing Administration (FHA) released two Mortgagee Letters on the Home Equity Conversion Mortgage (HECM) program. The first Mortgagee Letter, ML 2014-10, reminds mortgagees of FHA’s requirements prohibiting misleading or deceptive advertising, including in descriptions of the HECM program. The second Mortgagee Letter, ML 2014-11, addresses risk associated with certain fixed interest rate products. FHA will only insure fixed interest rate reverse mortgages where the homeowner is limited to a single, full draw made at closing.
The steady improvement in house prices and employment coupled with the 2013 refinance boom had a significant impact on foreclosures nationally. Across the country, the foreclosure rate fell dramatically. As depicted below, no state has seen an increase in its foreclosure rate over the 8-quarter period ending in the first quarter of 2014.
However, some states fared better than others. Florida, California, Arizona and Nevada all experienced significant declines following the bust of the sub-prime market and sharp declines in employment. However, Arizona and California experienced the sharpest declines in their foreclosure rate, respectively. By contrast, the improvements in Florida and Nevada were not as strong.
What’s more so, New York, New Jersey, Maine, Connecticut and Illinois have also experienced stubbornly slow improvement form high levels of foreclosure. The common thread among these states is that they all have judicial process for foreclosures or a process that has moved closer in that direction. While the judicial process can shelter the consumer with important protections, it can also slow or stall market clearing.
Where does your state stand? For more information on recent trends in your state, seethe Local Market Reports for the first quarter of 2014
*National Association of REALTORS®
Mortgage Rates Are Moving on Up
Mortgage rates inched higher this week for the second week in a row, with the 30-year fixed-rate mortgage averaging 4.33 percent, Freddie Mac reports in its weekly mortgage market survey.
"Mortgage rates crept up further following the uptick in the 10-year Treasury yield as minutes of the Federal Reserve's last meeting indicated little possibility of a pause in the central bank's reduction of bond purchases,” says Frank Nothaft, Freddie Mac’s chief economist. The Federal Reserve plans to wind down its $85 billion per month bond-buying stimulus program this year, which has been helping to keep mortgage rates low in recent years.
Freddie Mac reports the following national averages for the week ending Feb. 20:
- 30-year fixed-rate mortgages: averaged 4.33 percent, with an average 0.7 point, rising from last week’s 4.28 percent average. Last year at this time, 30-year rates averaged 3.56 percent.
- 15-year fixed-rate mortgages: averaged 3.35 percent, with an average 0.7 point, rising from last week’s 3.33 percent average. Last year at this time, 15-year rates averaged 2.77 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 3.08 percent, with an average 0.5 point, rising from last week’s 3.05 percent average. A year ago, 5-year ARMs averaged 2.64 percent.
- 1-year ARMs: averaged 2.57 percent, with an average 0.3 point, increasing from last week’s 2.55 percent average. A year ago, 1-year ARMs averaged 2.65 percent.
Source: Freddie Mac
The U.S. Department of Housing and Urban Development will be reducing the amount of loans for high cost areas of the country.
Beginning on January 1, 2014 all FHA loans will be capped in high cost areas at $625,500, reduced from the current cap of $729,750. FHA will keep its current loan limits in place in areas where housing costs are lower than $271,050. The new loan limit for the highest cost areas will affect about 650 counties, according to the Department of Housing and Urban Development.
FHA insures loans for buyers with down payments as low as 3.5 percent. The agency raised its limits during the financial crisis to help more home buyers, and the program quadrupled as a result. However, it faced mounting defaults and losses.
Imagine this. You are browsing the Internet and all of a sudden your browser crashes and a message appears telling you your files are encrypted and if you don’t have over money you are never getting access to your data again – corporate accounts, irreplaceable pictures of your child, you name it. Gone. The majority of trojans over the last few years have had laser focus on stealing data and money from your computer without you realising. However, there are trojans out there that have surprising and nasty behaviours like encrypting your files with a password you don’t have and demanding money to unlock them. This kind of malware is not new but over the past 18 months it has become significantly more prevalent and the malware authors have written significantly more clever and scary versions.
In withering day-after criticism, President Barack Obama declared Thursday that the 16-day partial government shutdown was a Republican-provoked spectacle that "encouraged our enemies" around the world.
Elsewhere in Washington, and around the country, federal employees simply streamed back to their jobs. National parks reopened. The popular panda cam at the National Zoo came back online.
But there was no letup in the political fight.
Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on September 30, 2013. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down. This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place. The information below is based on NAR staff review of agency agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns.