F.H.A. may need a bailout

According to a story in the New York Times, the F.H.A., the backbone of the Federal government's housing program is running low on cash.

Chances are nearly 50 percent that the Federal Housing Administration will need a bailout next year if the housing market deteriorates further, the agency’s independent auditor said in a report released Tuesday.

With the amount of cash on hand about 50% less than last year, the F.H.A. may have to call on the central government to replenish its accounts. All due, of course, to the housing crisis and the number of defaults in F.H.A. related mortgages. Stay tuned.

Read the full story here.

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Higher costs for F.H.A. loans are here

We have previously written about the higher costs associated with FHA loans. What I didn't know was that an FHA loan might cost you more than a loan with private mortgage insurance (PMI.)

Here's a good article from The New York Times explaining the new costs of FHA loans and comparing it to others.

Dealing With Higher Costs of F.H.A. Loans

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Is it becoming harder to get a mortgage? Looks as though it is.

Marc Santora of The New York Times writes about “New Worries for Buyers Seeking Mortgages.”


Frankly, there are horror stories out there about getting mortgages.

For one prospective apartment buyer,

“the moment she stepped into the two-bedroom apartment at 59th Street and First Avenue, with its oversized windows and sweeping views of the Queensboro Bridge, she just knew.”

And her offer was accepted.

“That was in August. But it was only in February, nearly six months later, that she finally closed on the $1.15 million apartment.

“In the intervening months, as she battled through a computer glitch and reams of documentation, Ms. Herman underwent a crash course in the complexities of navigating the mortgage market — which itself continues to undergo profound change.”

 “The dread of not finding a lender after the market collapsed in 2009 has been replaced by uncertainty, confusion and frustration. According to brokers and lenders, the list of demands that stand between finding a place to buy and signing on the dotted line simply never stops morphing.“

And it looks as though more change are coming to the mortgage market as the Obama administration plans to reduce the role of the federal government in the mortgage market by, for instance, lowering the limit on loan amounts for loans to be bought by Fannie Mae and Freddie Mac as well as reducing loan amounts for FHA and VA loans.

“And let’s not forget the federal government’s proposal to eliminate the mortgage interest tax deduction for high-income earners; the changes in the way brokers will be compensated because of new regulations; and the fact that banks — despite recent profits — are still leery of lending. Taken together, all these elements create a situation that can paralyze potential buyers. “

The result of all this is that “confusion and uncertainty can have the same impact as fear, unfortunately,” said David S. Marinoff, a mortgage broker and managing director of the Guard Hill Financial Corporation."

Summing up the problems facing the market is this from Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst for Prudential Douglas Elliman,

“housing does not truly recover until lending does. It is currently dysfunctional.”

Once again the crystal ball goes dim.

Read the full story.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

F.H.A. Loans to cost more

From the New York Times, Lynnley Browning writes about the increase in F.H.A. insurance premiums scheduled to take effect for loans taken out on or after April 18, 2011.

“FEDERAL Housing Administration mortgages, the government-insured loans that have surged in popularity in recent years, will be getting slightly more expensive this spring.

“The F.H.A. announced this month that it was raising the annual mortgage insurance premium for borrowers by a quarter of a percentage point — to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans, and 0.25 or 0.50 for 15-year or shorter-term loans.”

While the F.H.A. is calling the rise a “marginal increase,” “industry experts say that some consumers, especially those considered marginal borrowers, may now be prevented from buying or refinancing a property.”

This is the second change in premium rates in the past 12 months, having last gone up in November 2010.

“The increase does not apply to F.H.A. loans already in place, or to F.H.A. reverse mortgages or home-equity conversion (HECM) loans.”

The raise is necessary because F.H.A. reserves have fallen below required levels.

Read more, F.H.A. to Raise Insurance Premiums.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Guidelines for condos could slow market

While it may seem simple to buy a condominium unit, government guidelines are actually making it harder to get mortgage financing reports the New York Times.

Stricter guidelines that govern which buildings are approved for conventional mortgages — rolled out by three government agencies in stages since December 2008 — are locking out thousands of buildings nationwide. States like Florida and Arizona are especially hard hit; mortgage brokers say that some buildings in the New York area have also been affected.

The guidelines and approvals come from Fannie Mae, the buyer of home mortgages; Freddie Mac, its smaller competitor; and the Federal Housing Administration, which insures loans. The rules were meant to help strengthen their balance sheets as they faced a surge of loan defaults in the condo market.

Condominium associations are being called upon more frequently to open their books to Fannie Mae, Freddie Mac and the FHA. 

For instance:

Condo associations are required to set aside 10 percent of their budgets for maintenance and “reserves”; and new developments are ineligible for Fannie-backed financing unless 70 percent of their units have sold or are under contract (the threshold used to be 51 percent). Freddie Mac adopted similar guidelines last year.

 Waivers are available but none are sure things.  Fannie Mae does have a website that lists approvals as does FHA.

Read the full report, Stricter Lending Guidelines for Condos

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

FHA has a “Little-Known Loan Program for Fixer-Uppers”

Lynnley Browning writes in the Sunday New York Times about a program through the Federal Housing Administration, FHA, for rehabilitation of “distressed homes or any other fixer-upper not only face the daunting task of turning a run-down property into a livable one, but often worry about paying for it all.”

“There’s a way to make essential repairs and add other accouterments without dipping into savings or taking out a home-equity loan. The Federal Housing Administration’s 203(k) rehabilitation program provides for loans covering renovation costs as well as the purchase price of a primary residence — investors excluded — and it allows for just a 3.5 percent down payment.”

“Although the program has been around since 1978, it is not well publicized, and many borrowers mistakenly think they have to buy a wreck in order to qualify. They don’t.”

“Covered repairs include a new roof or heating system (geothermal ones too). Decorative changes, like replacing vinyl with ceramic tile on the kitchen floor replacement, or painting the interior, are covered.”

The rates are usually a percentage point higher than conventional mortgages and certain aspects of the program can result in “closing costs $1,000 or more higher than average.”

Read the entire report.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com