Condo Insurance Coverage for FHA Financing

HO-6 Condo Insurance Coverage

Required for FHA Financing—

Effective April 29, 2011

The one-year waiver of the HO-6 requirement expires April 28, 2011.  Any condominium unit mortgage (with FHA financing) closed on or after April 29, 2011 must:

• Evidence that the master policy includes interior unit coverage, including replacement of interior improvements and betterment coverage to insure improvements that the borrower may have made to the unit 

                                               

OR

• Borrower must obtain a "walls-in" coverage policy (HO-6 policy). 

Some lenders allowed the waiver of coverage requirement and some didn’t.  If you’ve been working with lenders that haven’t required HO-6 coverage for FHA financing on FHA approved condos then here’s your “heads up”.  FHA waived this new requirement for the last year to allow lenders to implement systems and software that could manage the disclosure, collection and tracking of this coverage. 

Many condominium project master policies don’t cover individual unit interior repairs.  That’s where HO-6 coverage comes in and fills the gap to provide full restoration of the dwelling unit in case of fire, water damage, etc.

Prepare your FHA condo buyers for this expense, which will be part of their qualifying ratios and refer them to your insurance agent partners who can help them determine what the project’s master policy covers and if HO-6 coverage is needed.

As Always…Call if I Can Be of Further Assistance!

Quick Guide to USDA Rural Development Loans

Not every community qualifies—but if it does, it’s the best thing since sliced bread!  Check your listings to see if the property location qualifies http://eligibility.sc.egov.usda.gov. Generous household income limits also apply and you can check them out at this link as well. Generate phone calls by letting everyone know 100% financing is still available for eligible properties and borrowers. Add an additional note to the listing info and mention it in your ads. 

Buyer Qualifications Highlights

·         No Down Payment Required and Zero Move-in cost is possible

·         30 Year Fixed Rate Loan

·         100% Loan plus you can add the 3.5% Guarantee Fee on top of that

·         Finance Closing Costs & Prepaids if Appraisal Is Higher Than Sales Contract

·         No stated maximum loan amount; maximum loan based on repayment ability

·         No monthly Mortgage Insurance

·         No cash contribution required from borrower.

·         Liberal Income Limits (by county)

·         Gift funds and grants allowed.

·         No Cash Reserve Requirements

Property Qualification Highlights

§  Existing Home

§  New Construction

§  New Manufactured Homes (Existing MH not allowed)

§  Modular Homes

§  Town homes

§  Condos (Must be approved projects)

Prohibited Loan Purposes

·         Co-signors not residing in the household

·         In-ground swimming pools unless waiver granted

·         Furniture and personal property

·         Income producing property

·         Excess land typically exceeding 30% (Site Value) of total property value

·         Previously occupied manufactured homes

Credit Repair Fact or Fiction???

Credit Repair Fact or Fiction?

You are the trusted real estate advisor so it’s likely that past clients will contact you when they are struggling with their mortgage payment or experiencing a short sale, foreclosure or deed-in-lieu that will show up on their credit report.  Here’s some credit reporting facts you can share:

The Credit Bureaus are a branch of the government, infallible, and above reproach.  FICTION - The credit bureaus are publicly & privately traded companies in business to impress stockholders. They are not government agencies. They are one of the most heavily regulated industries. The strict regulations stem from a public outcry of abuses and mistakes.

A recent survey by an independent research group revealed more than 70% of credit reports contained mistakes or errors.  The prevalence of errors has lead to consumer protection legislation that allows consumers to challenge the bureaus and force the removal of inaccurate, outdated or unverifiable information. 

Is Credit Repair Legal?   FACT - You bet it is! As a consumer you have rights under the Fair Credit Reporting Act (FCRA) passed in 1970.  Essentially this gives you the right to have the information about you reported accurately, the information can be verified and if you dispute an item they have 30-40 days to respond.  The other law that protects you is CROA, the Credit Repair Organizations Act.  If credit repair was illegal then there would not be a law governing Credit Repair Organizations!

 When I pay off a past-due account, such as a charge off or a collection account, it will show “paid” and no longer be negative.  FICTION - It is difficult to fully restore your credit without paying your outstanding debts. However, paying off a debt can actually hurt your credit. Negative items on your credit report are allowed to stay on your credit report for up to seven (7) years, except for bankruptcy that can stay for up to ten (10) years. This 7 or 10-year clock begins ticking at the date of last activity. When paying an outstanding debt, you will change the account status to paid collection, paid charge-off, satisfied judgment, so now it scores like a brand new paid collection, charge off or judgment and the 7 year reporting clock starts all over again!  

It is illegal for creditors to take a negative trade line off my credit report. The law requires that these items remain on the credit report for at least seven (7) years.   FICTION – There is no law that states negative information has to stay on your credit report for 7 or 10 years!  The law sets an upper limit that negative information can’t stay on your report for UP TO 7-10 years. The credit grantor or credit bureau may choose to delete the item whenever they see fit.

97% LTV Conventional Loans Making a Comeback!!!

97% LTV Conventional Loans Making a Comeback

The 97% Fannie mortgage is a great alternative to FHA financing and probably a better overall option for some homebuyers given the increased monthly MIP on FHA.  Here are the details:

Fannie 97 LTV

• NOT limited to first time homebuyers
• NO income or sales price limits (loan limits do still apply)
• Seller concessions are limited to 3% of purchase price
• Single family primary residences only (including eligible condo’s)
• Purchase or Rate Term Refinances
• Lender paid MI allowed (monthly, single and split premium options).
• No homebuyer counseling required.
• Fixed rates mortgages only
• 3% down must come from Borrowers own funds