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FHA Updates Effective January 1, 2009

Posted by Brian Collins on Dec 28, 2008

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The Housing and Economic Recovery Act of 2008 revised the National Housing Act to:

• Eliminate the variable loan-to-value (LTV) limits that were based on the combination of the property value and the average closing costs of the State where the property is located and
• Limit the total FHA-insured first mortgage to 100 percent of the appraised value, and permit the inclusion of the upfront mortgage insurance premium (UFMIP) within that limit.

For simplicity purposes, and to eliminate any confusion in the marketplace, effective for case numbers assigned on or after January 1, 2009 the maximum LTV for most refinance transactions will be 97.75 percent. A summary of maximum LTVs is shown in the table below.

Type of Refinance

Maximum LTV

UFMIP[1]

Rate-and-Term

97.75%

1.75%

FHA-to-FHA Streamline w/Appraisal

97.75%

1.50%

FHA-to-FHA Streamline w/o Appraisal

n/a

1.50%

Cash-Out Refinances

95% and 85%

1.75%


FHA Cash Out Refinance to 95% require a second appraisal:
FHA will now require a second appraisal for all cash-out refinances where the LTV, exclusive of the UFMIP, will exceed 85 percent of the appraiser’s estimate of value. This second appraisal requirement applies regardless of the loan amount or the location of the property, i.e., whether the property is in a “declining area” or is not. This second appraisal requirement for cash-out refinances is effective for all case number assignments on or after January 1, 2009

For additional FHA changes effective January 1, 2009 please contact us today.

Ameristar Mortgage is your local Wisconsin and Illinois FHA Mortgage Banker:

Brian Collins
Toll Free: (877) 240-5840 x29
brian.collins@ameristarmadison.com
www.AmeristarMadison.com

Visit my blog at http://www.ameristarmadison.com/blogs_brian_collins/

FHA blog posts:

http://www.ameristarmadison.com/blogs_brian_collins/content/no-money-down-fha-va-rural-housing-in-greendale-pewaukee-green-bay-milwaukee-franklin-and-west-allis-wisconsin/

http://www.ameristarmadison.com/blogs_brian_collins/content/fha-streamline-refinance-loans-for-wisconsin-and-illinois-residents/

http://www.ameristarmadison.com/blogs_brian_collins/content/fha-streamline-refinance-in-wisconsin-and-illinois/

http://www.ameristarmadison.com/blogs_brian_collins/content/no-money-down-first-time-homeowner-loans-in-illinois-fha-va-and-rural-housing/

http://www.ameristarmadison.com/government_loans/fha_wisconsin/index.htm

[1] As of October 1, 2008

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