USDA Rural Housing Loan: Georgia: Peachtree City

The rumors are true and I am excited! FHA has handed down the changes...

 

FHA had talked about increasing down payment to 5% rather than 3.5%

• Increased Enforcement- HUGE WIN!  Let's get the lenders that are not playing by the rules out of here- - the one's doing it right!
• MIP changes- not as big as you think- the analysis on monthly payment isn't a big hit
• We all have to follow the same rules, so no one has a leg up!
• 3% vs. 6% seller concession- talk to your borrowers about gifts! 

   Credit and Credit Scores

• New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. (PrimeLending requires a 620 credit score for all transactions)
• This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
• This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

Reduce allowable seller concessions from 6% to 3%  

• The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
• This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

Increase enforcement on FHA lenders  

• Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.  
• This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available. Enhance monitoring of lender performance and compliance with FHA guidelines and standards.  
• Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
• This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
• Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
• HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:  
• Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
• Legislative authority permitting HUD maximum flexibility to establish separate "areas" for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

These changes are a positive move for our industray. Industry leaders will embrace them and continue to help more people achieve their dreams of home ownership!

Hey Peachtree City & AR...City Council recently voted by a margin of 3 to 2 not to increase property taxes for fiscal year 2010!  However, Council did agree to increase the millage rate to 5.711 mils.  The increase in the millage rate would prevent the usage of cash reserves for the FY 2010 budget.  Just in case you are wondering were the money is going....approximately 16.5% is headed to Peachtree City, 67.2% goes to Fayette County School Board, 15.5% goes to Fayette County and 0.7% goes to the State.  Three public hearing were scheduled (as required by law) to advertise the increases. 

Peachtree City's Finance Director, Paul Salvatore and City Manager Bernie McMullen recommended the increase which would have raised the average resident's taxes an additional $27.00 and brought a total of $474,000 in revenues to the City's coffers.  According to City officials, without the raise in millage the City would have been forced to use almost a half million dollars out of the current $9 million in surplus monies. 

There is much speculation surrounding the decision as concerns for a continuing downturn in the economy may pose a risk to current budget reserves.   Some officials believe that uncertain and unstable economic conditions could lead to a more substantial tax increase down the road.  Pundits have indicated that realistically not raising property taxes could result in property tax increases of $300 next year.

Peachtree City mayor Harold Logsdon has been outspoken on his objection to a tax increase based on the 35% excess in cash reserves.  Logsdon feels that the City can use a portion of their cash reserves to eliviate a tax increase and still keep a 33% reserve.  The City's policy is to keep 20% to 25% in reserves.      

Should taxes have been increase?  Well...Salvatore further stated that the survey results from residents and businesses who responded indicated a 70% and 74% support of the increase. 

Okay Peachtree City, of course the looming question in your mind is.....what is the percent of responses received from the survey sent to businesses and residents?  Great question!  May I suggest a call to your local councilperson or to Mr. Salvatore's office to get an appropriate response.

I don't want this to turn into a pro-Obama, anti-Obama post! I just wonder if his Presidency is giving our children a good message or a bad one. Two different ideas occur to me.

1: Good Message: President Obama is clearly a triumph for race relations. Most of us are old enough to live during a time this would have been out of the question. He campaigned on ideas and was not openly a member of an old boys club, nor did he have family connections. He was a fresh face and had his own ideas to promote. In this sense.....is it a good message?

If you want to achieve something, you can.....you can promote your ideas and succeed.

2: Bad Message: President Obama has just won a Nobel Peace Prize which is a high honor for working hard and making a difference. By virtue of his youth and inexperience....he hasn't achieved anything. Yet....he's being awarded an extreme honor based on the hope that he will. Is this a bad message?

You don't need to accomplish anything to get the same awards and accolades as others....ie, you'll get an A for effort or intention.

Your thoughts?