FHA-New Guidelines Converting Existing Home to Rental, Halloween Breakfast and Flu Shots, Great Words To Live By, Information to Share with your clien

Halloween Breakfast and Flu Shots- It is fitting that we will hold our annual flu shot clinic here at the office on Halloween morning- I think that they are pretty scary- don’t you :) although I do get one every year myself. We will have a nurse at our office from 8-9 AM for flu shots on October 31 if you would like one. I do need an RSVP for the flu shots by 10/29 so that the nurse knows how many shots to bring. The cost is $25 per person. So, to make it fun (and we are always looking for a reason to throw a party), we will be serving breakfast at the same time (Friday morning, October 31 from 8:00-9:00 AM). We will have scrambled “brains” :) (eggs) with tortillas with all the trimmings and homemade pico made by Chef David (my husband) who most of you know is an excellent cook. So whether or not you are getting a shot, come on by for food, fun and prizes. We look forward to seeing you here! Great Words to Live By…….. Words can never adequately convey the incredible impact of our attitude toward life. The longer I live the more convinced I become that life is 10 percent what happens to us and 90 percenthow we respond to it. I believe the single most significant decision I can make on a day-to-daybasis is my choice of attitude. It is more important than my past, my education, my bankroll, my successes or failures, fame or pain, what other people think of me or say about me, my circumstances, or my position. Attitude keeps me going or cripples my progress. It alone fuels my fire or assaults my hope. When my attitudes are right; there’s no barrier too high, no valleytoo deep, no dream too extreme, no challenge too great for me. - Chuck Swindoll Important New FHA Guideline on Converting The Existing Home to Rental: We sent this out on 9/26, but have had a calls on it, so we wanted to reiterate this again. Buyers cannot purchase a home going FHA if they are going to rent out their current property and use the lease income to offset the mortgage payment- except for the following exceptions below. I have enclosed information from the actual mortgage letter and have highlighted the most important parts: Recently, FHA and others in the mortgage industry have observed an increasing number of homeowners who have chosen to vacate their existing principal residence and purchase a new residence. This has been occurring as some homeowners, given the rising price of fuel, are relocating to homes nearer their employment, or are taking advantage of other home buying opportunities arising in the marketplace. Due to FHA’s concern that some homebuyers in these transactions may attempt to provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage, FHA is instituting underwriting guidance designed to assure that the homebuyer can make payments on the full debt service of both mortgages. Consequently, beginning with case number assignments on or after the date of this Mortgagee Letter and until further notice, the underwriting analysis may not consider any rental income from the property being vacated except under circumstances described in this Mortgagee Letter (see below for exceptions). The exclusion of rental income from property being vacated is being instituted on a temporary basis while FHA further analyzes this situation to determine whether permanent measures may need to be taken. This will assure that a homeowner either has sufficient income to make both mortgage payments without any rental income or has an equity position not likely to result in defaulting on the mortgage on the property being vacated. In either case, this guidance is directed to preventing the practice known as “buy and bail” where the homebuyer purchases, for example, a more affordable dwelling with the intention to cease making payments on the previous mortgage. Although the property being vacated will not have a mortgage insured by FHA, surrounding properties may and, thus, FHA may be indirectly negatively affected should that property result in a foreclosure. Exceptions to the above policy: Rental income on the property being vacated, reduced by the appropriate vacancy factor as determined by the jurisdictional FHA Homeownership Center (see http://www.hud.gov/offices/hsg/sfh/ref/sfh2-21u.cfm) may be considered in the underwriting analysis under the following circumstances: · Relocations: The homebuyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance (typically 50 miles- but underwriter discretion) . A properly executed lease agreement (i.e., a lease signed by the homebuyer and the lessee) of at least one year’s duration after the loan is closed is required. FHA recommends that underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner. · Sufficient Equity in Vacated Property: The homebuyer has a loan-to-value ratio of 75 percent or less, as determined by either a current (no more than six months old) residential appraisal or by comparing the unpaid principal balance to the original sales price of the property. The appraisal, in addition to using forms Fannie Mae1004/Freddie Mac 70, may be an exterior-only appraisal using form Fannie Mae/Freddie Mac 2055, and for condominium units, form Fannie Mae1075/Freddie Mac 466. The guidance in this Mortgagee Letter applies solely to a principal residence being vacated in favor of another principal residence. This Mortgagee Letter is not applicable to existing rental properties disclosed on the loan application and confirmed by tax returns (Schedule E of form IRS 1040). If you have any questions on the above, please feel free to contact us at 972-278-3400. We also sent out on 9/26 when a buyer can have two FHA mortgages at the same time. If you did not receive that information and need it, just let us know and we will forward it to you. If you have friends or clients who ask you, “What does the rescue bill do to me, or for me?” have them check this out: http://www.forbes.com/2008/10/02/bailout-taxes-washington-biz-beltway-cx_lm_bw_1001bailout.html?partner=daily_newsletter Fed Cut As you know, the Federal Reserve cut the Fed Funds Rate by 50 basis points on Wednesday and coordinated an emergency global interest rate cut with the European Central Bank, Canada, UK, Switzerland and Sweden. Typically, when the Fed cuts rates by itself, the US Dollar weakens--which leads to higher inflation and negative movement for Mortgage Bonds which is what we saw quite significantly this week. Remember a weakness in mortgage bonds is a negative in mortgage interest rates (and we saw rates jump up quick). Stay tune on Monday for more information. Have a blessed week. When we can be of assistance to you and your buyers, simply call us at 972-278-3400. Linda Davidson, Senior Loan Officer, DE Underwriter Service First Mortgage 972-278-3400 office 972-497-6452 fax 1-866-963-3777 Toll Free www.davidsongroup.net Check out our blog: http://lindadavidsonmortgage.blogspot.com The Davidson Mortgage Group Ranking 6th Nationally in FHA/VA Purchase Units Closed! Ranking 33rd Team in the Nation in Total Purchase Units Closed! Ranking #69th Team in the Industry for Total Units! Voted #1 Area Mortgage Team For The Past 10 Years We ARE The Mortgage Experts! Your Lender for Purchase, Refinances, Reverse Mortgages and Commercial Lending!! P.S. The finest compliment that we can receive is a referral from you . We appreciate your trust! Linda