Update on FHA Mortgage Programs · 2016-11-28 · FHA’s Office of Single Family Housing 1 Homes Within Reach Conference –Affordable Housing Mortgages Update on FHA Mortgage Programs

FHA’s Office of Single Family Housing

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Homes Within Reach Conference – Affordable Housing Mortgages

Update on FHA Mortgage Programs

November 15, 2016

Presenter:

Michael LevineSenior Housing Program Officer, Philadelphia HOCU.S. Department of Housing and Urban Development (HUD)


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Today’s Presentation

• FHA Loan Affordability: Features that make an FHA loan affordable and a historic vehicle for access to credit.

• FHA Update: What FHA is doing to address three Single Family Housing priorities:

― Expanding Access to Credit― Ensuring Long Term Viability of the Mutual Mortgage

Insurance Fund― Making it Easier to Do Business with FHA


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FHA Affordability: Providing Access to Credit for Many Families and Purposes

Features that make FHA the current choice of many

first-time homebuyers and those with special

housing needs.


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Affordable Features of FHA Loans

• Down payment requirement: Only 3.5 percent.

• Government secondary financing or a gift from family or one’s employer can cover 3.5 percent.

• Streamline Refinance opportunity.

• Permit Non-Occupying Co-borrower.

• Competitive interest rate availability.

• Assumable.

• Effective permanent requirement that lenders must help borrowers avoid foreclosure.

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• Purchase and rehabilitate with one low-cost loan.

• Renovation funds are escrowed so work can be done after closing.

• Modernize, add rooms, new heating or roof, energy improvements, or other real property needs.

• Limited 203(k) for non-structural work up to $35,000; no consultant required.

• Loan amount is based on as-rehabilitated value.

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203(k) – Purchase or Refinance with Rehabilitation

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• HFA, local government, family, or employer may cover down payment but employer may not restrict employment as a condition.

• Other parties can cover closing costs and POCs, but not included in down payment calculations.

• No combined LTV restriction on purchase with FHA and non-amortizing government second loan.

• Resale restrictions must dissolve upon foreclosure.

Combining FHA with Affordable Seconds or Gifts

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FHA Funds Energy Improvements

• 203(k) can fund energy improvements.

• Solar, wind, and Energy Efficient Mortgage Improvements can be financed in standard FHA Purchase or Refinance loans and may increase a base loan above statutory maximums.

• Energy Efficient Homes (EEH) are entitled to higher ratios of debt-to-income in view of presumed utility cost savings.

• Property Improvement (Title I) Program is a stand-alone loan product that can finance energy improvements: – Unlike home equity loans and HELOCs, there are no Loan-to-Value

ratios or credit score restrictions.

– No lien is required if the loan is under $7,500.

– Maximum loan amount is $25,000 May be up to a 20 year term.


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• After most FHA foreclosures, lender files a claim and

conveys property to HUD.

• HUD pays contractors to manage and sell

properties.

• Properties are bid out first to owner occupants, then

to investors.

• Revitalization Areas: 30 – 50 percent discounts for

government, non-profits, teachers, police and

emergency responders.

• List price is based on appraised value and declines

over time for unsold properties.

HUD Real-Estate Owned


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HUD Home Storewww.hudhomestore.com


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FHA Single Family Priorities

Working with industry participants to enhance business processes,

communication, and policy clarity.

Making it Easier to Do Business

Implementing responsible ways of providing first-time homebuyers and

underserved, credit worthy borrowers access to credit to ensure long-term

homeownership success.

Expanding Access to Credit

Balancing our mission with sound lending practices to ensure the health of the Mutual

Mortgage Insurance Fund.

Ensure Long-term Viability of MMI Fund


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Responsibly providing first-time homebuyers and underserved, credit worthy borrowers access to credit to ensure long-term homeownership success through:

• Housing Counseling• Single Family Housing Policy Handbook• Quality Assurance Framework

Expanding Access to Credit


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Increased Affordability Translates into Increased Access to Credit

• FHA is now appropriately priced.

• Premium structure supports the MMIF and facilitates access to credit:― 42% increase in borrowers served by FHA in FY 2015.

• Mortgage Insurance Premium rate reduction helped 75,000 new borrowers in FY 2015 with credit scores of 680 or below.

LAST REVIEWED: 11/19/15


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Endorsement Counts by Fiscal Year and Quarter



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FHA Purchase Mortgages and Access to Credit


0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2010 2011 2012 2013 2014 2015 2016

Non-First

First79% 75% 79% 79% 82%

21%

25%21%

21%

18%22%

78%

18%

82%

Source: FHA Home Mortgage Insurance Division

FHA Share of Portfolio: First-Time Homebuyers (FY)


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Pennsylvania Endorsement andFirst-Time Homebuyer Trends

Fiscal YearFHA

OriginationsFirst Time

Homebuyers

2013 47,329 20,236

2014 27,769 17,062

2015 38,162 21,773

2016 43,530 25,909


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FHA Purchase Endorsements as Proportion of Total State Purchase Originations CY 2014

FHA Annual Report to Congress, FY 2015, p. 20; Source: HMDA 2014



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Housing Counseling and Education• Network funded and overseen by HUD.

• Enables families underserved by the current mortgage market to achieve sustainable homeownership.

• Enables all consumers to make better housing choices.

• Prevents foreclosures of defaulted loans.

• When provided before purchase, reduces default rates.

• Provides value add to mortgage and real estate industries.

• Will be promoted in an upcoming FHA marketing campaign for consumers and the Housing industry to raise awareness of the value added and to mainstream usage.


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FHA’s Single Family Housing Policy Handbook 4000.1 (SF Handbook) is a consolidated, consistent, and comprehensive single source for FHA Single Family Housing Policy:

• Consolidated: Eventually, all SF Mortgagee Letters, Housing Notices, Handbooks, and other policy documents will be consolidated into a single source.

• Consistent: Consistent format and terms throughout the SF Handbook support easier use – a key to FHA’s Access to Credit strategy.

• Comprehensive: The SF Handbook will cover all Single Family Housing policy.

SF Handbook Overview

Last Reviewed: 9/30/16


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• Title I

• Home Equity Conversion Mortgages

SF Housing Policy Handbook: Sections Still to Come



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Condominium Project Approval Temporary Provisions

• August 24, 2016, Mortgagee Letter 2016-13 extended temporary condominium project approval policy provisions, without changes, until August 31, 2017.

• Supports the continuation of FHA’s ability to insure mortgages in condominium projects and avoid market disruption.

• Condo Project Approval proposed rule published in Federal Register on September 28, 2016.

• Mortgagee Letter 2016-15 allows greater flexibility in owner occupancy, down to 35 percent in existing projects under specific circumstances indicating good project financial health.



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Balancing our mission with sound lending practices

to ensure the health of the Mutual Mortgage

Insurance Fund.

Ensure Long-term Viability of MMIF

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• The Mutual Mortgage Insurance Fund has reached 2.07%, up from 0.41% in FY 2014, and has an Economic Net Worth of $23.8 billion, up $19 billion from FY 2014.

• Improvement in the Fund is attributable to FHA actions, including improved risk management and loss mitigation, that have strengthened portfolio performance.

• The MIP reduction has played an important role in the housing recovery and allowed FHA to serve 75,000 new borrowers this year with credit scores below 680.

Mutual Mortgage Insurance Fund: Marked Improvement



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Serious Delinquency Rates - All Forward Endorsements



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HECM in Transition: Program SustainabilitySince passage of the Housing and Economic Recovery Act (2008) and the Reverse Mortgage Stabilization Act (2013), FHA has reformed the Home Equity Conversion Mortgage (reverse mortgage) program by:• Limiting initial withdrawals to ensure program financial

stability;

• Developing criteria to allow certain non-borrowing spouses to remain in the home after the death of the borrowing spouse;

• Expand home retention options that can be offered to senior borrowers who fail to pay property tax and hazard insurance payments;


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• Requiring financial assessments for HECM borrowers to ensure long-term adequate income to cover housing expenses, such as maintenance, property taxes, and utilities; and

• Strengthening prohibition of misleading or deceptive advertising.

HECM in Transition: Program Sustainability (cont.)


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Working with industry participants to enhance

business processes, communication, and policy

clarity.

Making it Easier to Do Business

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SF Handbook Pre-Recorded Webinars

• Series of eight updated, pre-recorded training webinars launched on June 30, 2016.

• Covers the SF Handbook’s entire Origination Through Endorsement section for Title II forward mortgages.

• Access the pre-recorded webinars on the Single Family Housing Self-Paced, Pre-Recorded Trainingpage.


http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/events/sfh_hb_webinars


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Technology and Business Transformation Strategies and Goals

• FHA’s Business Transformation goals are to:― Increase operational efficiencies and replace legacy infrastructure;

― Enhance processes and tools throughout the organization and for stakeholders;

― Improve risk management capabilities; and

― Make it easier to do business with FHA.



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FHA Single Family Business Transformation Overview

TOTAL / MISMO

Origination through Endorsement

SF Housing Policy

Handbook (HUD Handbook 4000.1)

Electronic Appraisal

DeliveryeCase Binder



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Current

State

• Only LI Lenders are able to submit eCase Binders when a binder is

requested; some still submit paper.

• Costly to receive, handle, and store.

• Current capability/functionality of eCase Binder provides limited

ability to navigate and search the files efficiently.

Future

State

• Enhance submission process - upload files vs. interface.

• Enhance functionality for improved ease of use:

― Indexing

― Navigation

• Ability to append/update binders.

• Link appraisal documents (EAD/binder).

• Submission history.

Implementation

Strategy• Phased implementation for both LI and non-LI Lenders.

Long-term strategy is to eliminate the use of paper binders for all lenders.

Planned Effort - eCase Binder



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• Knowledge Base: www.hud.gov/answers ― 1600+ Qs and As addressing 90 percent of our phone calls and announcements of policy changes and training opportunities.

• Email: [email protected]

• Phone: Monday-Friday, 8:00 AM – 8:00 PM (Eastern)Toll Free: (800) CALL-FHA or (800) 225-5342

• Single Family Housing News (FHA INFO) emails: Frequent email notifications of new policies and training opportunities for

anyone who signs up.

The FHA Resource Center

Documents

Update on FHA Mortgage Programs · 2016-11-28 · FHA’s Office of Single Family Housing 1 Homes Within Reach Conference –Affordable Housing Mortgages Update on FHA Mortgage Programs