Legislative Newsletter Archive >>

The County's Department of Housing and Community Development announced on January 19 that February 19, 2010 is the last day DHCD will accept applications for most NSP assistance packages (see funding alert). However, the County Council passed CR 3 on Tuesday which extends the program for applicants in the "below 50% of area medium income" levels and these loan packages could be in the amount of up to $60,000. The latest DHCD program summary follows:

NEW GUIDELINES FOR REMAINDER OF NSP APPLICATION PERIOD:
INCREASED LOAN LIMIT OF UP TO $60,000 FOR HOUSEHOLDS
AT OR BELOW 50% OF THE AREA MEDIAN INCOME LEVELS ONLY

To increase housing affordability for applicants at or below 50% of the area median income levels, a new NSP loan limit of up to $60,000 is now available for down payment and closing costs assistance to purchase foreclosures in all 33 NSP eligible zip codes. The following new guidelines are effective immediately and will apply until the February 19, 2010 NSP Application deadline or until funds earmarked for this population are depleted. (As of June 15, 2010 over 650 families have obtained funding and $1M in funding is still available.)

APPLICABLE ONLY TO HOUSEHOLDS WITH INCOME AT OR BELOW LEVELS OUTLINED BELOW
2010 Income Levels
Effective 5/14/10

	Very Low Income
	50%
1-Person Household	$36,250
2-Persons Household	$41,400
3-Persons Household	$46,600
4-Persons Household	$51,750
5-Persons Household	$55,900
6-Persons Household	$60,050
7-Persons Household	$64,200
8-Persons Household	$68,350

REQUIREMENTS

1. Up to $60,000 per household (note that $60,000 is not automatic). The amount approved is what will be needed to achieve requirements for back end ratio, and minimum LTV for 1^st Trust.
2. Maximum back end ratio 45% - no exceptions, no compensating factors
3. Minimum LTV for the 1^st Trust loan is 65%.
4. Maximum of 2 points, including loan origination
5. Additional points up to a total of 4, including loan origination, approved only if buy down of rate is documented.
6. Minimum applicant contribution of $1,000
7. 15 year primary residency requirement
8. 15 year loan term
9. 0% interest, deferred payment

REPAYMENT REQUIREMENTS

Length of Time Purchaser Retains Home as Primary Residence	Balance Due (As % of Total DPCCA Loan Received)
Less than 5 years	100%
At Least 5 years but less than 15 years	70%
15 or more years	50%

If you have any questions, please contact Rosalyn B. Clemens, NSP Program Manager at 301-883-3288 or Yetta Stokes, NSP Senior Loan Processor at 301-883-7409.

The National Association of REALTORS^® has released the following statement regarding yesterday's announcement on proposed FHA underwriting changes:

In October 2009, FHA announced that its capital reserve fund had fallen below the congressionally mandated level of 2 percent. The drop in capital reserves has led Congress and the Administration to call for changes to strengthen FHA.

On January 20, 2010, FHA announced major changes to ensure its long-term financial soundness. FHA is trying to balance three fundamental objectives:

1. financial soundness of the FHA insurance fund - ensuring that its capital ratio returns above 2 percent,
2. fulfilling its mission of serving borrowers not adequately served by the private sector and
3. facilitating the recovery of the housing industry and the over-all economy.

NAR has met with the Commissioner on several occasions to discuss the state of the housing market and to underscore FHA's invaluable role. By all accounts the new changes are a victory for home buyers. FHA has carefully balanced the need to make financial reforms with the need to keep FHA available to a large segment of consumers. This is evident by retaining the 3.5 percent minimum down payment requirement and allowing the up-front mortgage insurance premium to be financed.

FHA announced changes in the following areas:

• The upfront mortgage insurance premium (UFMIP) will increase to 2.25 percent up from 1.75 percent. Contrary to reports, FHA will continue to allow the financing of the UFMIP.
• Borrowers with a credit score below 580 will be required to have at least a 10 percent down payment. The minimum down payment will remain at 3.5 percent for all other borrowers.
• FHA will seek legislative authority to increase the annual premium (currently capped at .55 percent). Over time, increasing the annual premium may allow FHA to reduce the up-front premium.
• Seller concessions will be reduced to 3 percent from 6 percent.

FHA will make the following lender enforcement changes:

• FHA will implement credit watch terminations at lender underwriting.
• Public reporting of lender performance through scorecard system will be implemented.
• FHA will implement, through notice and comment, indemnification against lenders.
Indemnification will be expanded beyond fraud and misrepresentation.
• FHA will seek legislative authority to enforce indemnifications against direct endorsed (DE) lenders.
• FHA will seek legislative authority to sanction lenders nationwide based on performance of local branch.

FHA is an integral part to the continued recovery of the real estate industry and the overall economy. NAR will continue to work with FHA, the Administration, and the Congress to ensure FHA can fulfill its mission while providing for the safety and soundness of the insurance fund. NAR is committed to assisting FHA as they balance risk management with creating homeownership opportunities across the country.

Proposed FHA Underwriting Changes:
FHA Announces Policy Changes to Address Risk and Strengthen Finances >>
Washington Post article >>

Effective February 1, 2010, HUD is temporarily lifting the "90 day resale restriction" rule which prohibits FHA mortgage insurance for a subsequent resale within 90 days of original purchase. The waiver is effective for one year. To protect consumers from potential "flipping" scams, the waiver is limited to sales meeting specific conditions. Click below for specific details.

FHA Waiver of 90 Day Resale Rule:
HUD Takes Action to Speed Resale of Foreclosed Properties, Press Release >>
Waiver of Requirements of 24 CFR 203.37a(b)(2) >>

On November 17, 2008, HUD published a new final rule "To Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs." The rule mandates use of a new Good Faith Estimate (GFE) and HUD-1 which went into effect on January 1, 2010. Click below to view the latest NAR RESPA details.

NAR RESPA Information:
http://www.realtor.org/government_affairs/respa