FHA Loan Expert Blog

Below is the Policy Modification to FNMA Flips that amended the Selling & Servicing Guides.  It was Announcement 04-07 and dated November 8, 2004.  Hopefully, this will clear up what is allowed and what is not allowed with regards to FNMA property flips.  The crux of the transaction is based on publicly available information.  Here is what Fannie Mae has to say about property flipping:

Based on internal analysis and lender feedback, we are revising our underwriting policy.  This policy modification is not designed or intended to affect the legitimate business practice of buying real estate at a wholesale or discounted price and re-selling it for the property’s market value.  The implementation of our revised underwriting policy should help homebuyers and lenders from becoming victims of predatory property flipping schemes. 

Although we encourage lenders to implement this change to our policy as soon as possible, this revised underwriting policy is mandatory for loan applications taken on or after May 1, 2005

We believe the likelihood of fraud or misrepresentation increases when the lender is not able to confirm that the property seller in a purchase money transaction (or the borrower in a refinance transaction) is the owner of the subject property based on publicly available information. Therefore, we are modifying our policy to require the lender to confirm and document in the mortgage file that the property seller in a purchase money transaction (or the borrower in a refinance transaction) is the owner of the subject property when a new appraisal is required. Examples of acceptable documentation include, but are not limited to, the appraiser’s analysis and conclusions in the appraisal report, a copy of a recorded deed or mortgage, a recent property tax bill or tax assessment notice, a title report, a title commitment or binder, or a property sale history report. This documentation is especially important for transactions involving an assignment (or sale) of a contract for sale and/or “back-to-back,” “simultaneous,” or “double” transaction closings (or double escrows) to support the property acquisition, financing, and closing.

As part of the loan origination process, it is critical for the lender to analyze and review the sale(s) of the subject property and the sale price trend in relation to the appraiser’s opinion of value to confirm that they are reasonable and representative of the market.

We believe that confirming and documenting the current owner of the property based on publicly available information as part of the loan origination process will help to ensure a more meaningful analysis of the sale (or transfer) history of the subject property. This policy modification will ensure that lenders and their appraisers understand the quality and timeliness of, identify time gaps in, and assess the accuracy of, their data sources.

Fannie Mae Announcement 04-07 dated November 8, 2004

Any case numbers ordered today for FHA mortgage loans will be subject to FHA’s new risk based pricing.  The credit scores are tiered as follows:

• 680 and above
• 640 to 679
• 600 to 639
• 560 to 599
• 300 to 499

The Loan-To-Values (LTVs) are tiered as follows:

• 90% LTV or less
• 90.01 to 95% LTV
• Above 95% LTV

FHA Risk Based Pricing Matrix in PDF format.

There are many thoughts in the marketplace on current fha apr and I’m certain that you have arrived at the FHA Loan Expert Blog for current times through a thorough search on the subject.  Speaking of searches, we were having a discussion on a blog about the relative importance of “Current FHA APR” and I think it is best if we break down the definition of each word: Current, FHA, and APR.

Current: The word current has a number of different meanings.  Current can have to do with electricity, or flowing, or an onward movement, but in the particular context of “Current FHA APR” it takes on a different meaning and has to do with being current or ‘time’ in other words.  Pay attention to the word current as its definition will make perfect sense when we understand the context of the following: current FHA APR.

FHA: Well this is the FHA loan expert blog and we sure know what FHA means.  It stands for the Federal Housing Administration (FHA).  This is the agency sponsored by the Dept. of HUD to promote the FHA mortgage loan.  That is the second part of: current, fha, apr.

APR: This is probably the most fascinating part of current fha apr because it is the portion of the current fha apr formula that the one searching on the internet is seeking.  APR is the annual percentage rate.  This is the third part of current, fha, apr.

So, now that we know what current, fha, apr means.  What is the Current FHA APR?

Here is where you will find the lenders that will provide the FHA APR for the current time.