FHA

Development - FHA is experiencing more business due to first time home buyer market, increased loan amount sizes, and less money down.

Trend - Deficiencies are increasing.

Action - Look for some sort of “risk based” or tiered pricing on either rate or monthly MIP.


Appraisals

Development - Appraisals are more scrutinized now than ever before.  Why?  One hundred percent financing was the rage from 2003- 2007.  Today homes are not increasing in value; many buyers’ have no equity, and thus are walking away from homes.  Prices drop and lenders want to ensure they are lending on good collateral today.

Trend - Appraisers are more cautious today and require more time and data.

Action - Do not rush your appraisal and make sure your due diligence period for the appraisal does not expire on a weekend or holiday.


100% financing

Development - Although Conventional 100% financing currently dos not exist, 100% financing is still available by marrying FHA with a down payment assistance program.

Trend - Some sales contracts do not properly incorporate or spell out the correct numbers which can lead to false expectations on the terms of the loan.

Action - Be sure to obtain the correct numbers along with the proper addendums for FHA and DPA (down payment assistance) from your lender. Your lender should always be available to discuss the terms with all parties, to clarify intent and numbers, and always, always ensure terms are correct and in the right section of the contract.


Underwriters

Development – Underwriters are under as much scrutiny as appraisers.

Trend - Guidelines are relatively the same as 10 years ago… it is just under today’s environment, the guidelines are followed more closely.

Action – Prepare buyers that they will need to provide documentation throughout the loan process.


If you have any questions on these developments, please contact me and I will be happy to provide the best advice and most accurate information possible.

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Be sure to interview your lender.  The lender’s role is more involved now than ever before. 
 
A few questions to consider asking the lender:

1. Tenure in business? (Experience is key in this ever changing environment.)
2. Does lender communicate clearly and pro-actively? (Communication on crucial issues is also key; remember your lender will be guiding your client’s loan expectations and the closing process which directly impacts your paycheck your reputation.)
3. Is underwriting done in local branch or sent out to a mass production center?  (There has never been a more crucial time for your client’s file to be underwritten locally.  Local underwriting allows faster service, faster answers, and much more control.)