I had a broker friend call me yesterday in a panic saying the HUD will belowering the max cash-out limit to 85%LTV for all FHA loans. This was the first I've heard of it, none of my reps have called or said anything. Is this for real or just hearsay? anyone hear anything???

I searched the site and answered my own question. If and when they implement this it could seriously affect a lot of business for people. I would have to say at least 40-50% of my business here in AZ and the surrounding states are homeowners that are above 90% and looking some debt relief. Man, i love a challenge but....

Newest twist to impact some refi's:

for all of the below:

http://www.allregs.com/efnma/index.asp?dv=0&id=a&ii=0&im=0&io=fnma&ip=/&iq=0&iv=0&iw=0&iy=0&iz=0&fc=0&fk=_&fm=0&fs=0&fv=0&sd=/&sm=1&sp=fnma&sq=_&st=_&sv=0&sx=/&sy=0&sz=0&t=0&tc=fnma&tp=/&td=0&ti=0&tm=0&to=fnma&tw=0&tv=0&tq=0&tx=/

If you are not on the mortgage currently, then a refi cash-out is limited to 50% LTV.

•Outstanding liens with no continuity of obligation

any update on the 85%?

I have not heard anything about 85% max cash out on FHA.  Please ask your source for more information.  Is this just a rumor?

Not a rumor as some major Mortgage associates are already sending out notices about this

I have not gotten anything yet.  I actually have 3-4 in the pipeline now that I need to get closed ASAP.

As long as you have a case number already assigned you are safe. It's my understanding that the new guides are only for case numbers pulled after they announce the changes.

i haven't seen FHA ever do sudden changes.

They may say starting in Jan 2009

Can someone post an e-mail from a reputable source?

well it hasn't happened but i think i got the email from NAMB

As far as I know, its not official yet, but as you well know, lenders always jump the gun "just in case".  Files with case numbers are safe, so fire a case number into the mix

Hey James!  Glad to see you made it over here!

here's something that Adam Brown, one of our MBSLive members sent me on H4H

Basic Facts the HOPE for Homeowners Program
What is the HOPE
for Homeowners
Program?
HOPE for Homeowners (H4H) is a program designed to assist borrowers at risk of default or
foreclosure in refinancing to an affordable 30-year fixed rate FHA loan. The program is effective
October 1, 2008 and will conclude on September 30, 2011.
Which lenders are
eligible to participate?
All approved FHA mortgagees are eligible to originate mortgages under the H4H program. All
lender participation is voluntary.
Borrower eligibility Borrowers may be eligible if (among other factors):
• The home to be refinanced is a 1-unit primary residence, and the borrower has no
ownership interest in any other residential real estate.
• The existing mortgage was originated on or before January 1, 2008, and the borrower has
made at least 6 payments on it.
• Their monthly mortgage payments exceed 31% of their gross income as of March 31,
2008.
• They are unable to pay his/her existing mortgage(s) without help.
• They must certify that they have not been convicted of fraud in the past 10 years or
intentionally defaulted on their debts, and that they did not willingly provide material
false information to obtain their existing mortgage(s)
Borrowers may be current or delinquent on their existing mortgage(s).
How does the
program work?
The process is similar to the current FHA application process with the following additions:
• The loan amount may not exceed a nationwide maximum of $550,440.
• The new mortgage will be no more than 90% of the new appraised value including any
financed UFMIP with the lender essentially writing down the current mortgage to that
amount.
• Upfront MIP is 3% and the monthly MIP is 1.5%
• The holders of existing mortgage liens must waive all prepayment penalties and late
payment fees.
• The existing first mortgage must accept the proceeds of the H4H loan as full settlement
of all outstanding indebtedness.
• Existing subordinate lenders must release their outstanding mortgage liens.
Standard FHA policy regarding closing costs applies, and they may be 1) financed into the new
loan provided the LTV does not exceed 90% including UFMIP, 2) paid from the borrowers own
assets, 3) paid by the servicing lender or third party (e.g., Federal, state, or local program), or 4)
may be paid by the originating lender through premium pricing.
The borrower must agree to share both the equity created at the beginning of this new mortgage
and a portion of any future appreciation in the value of the home.
The borrower cannot take out a second mortgage for the first five years of the loan, except under
certain circumstances for emergency repairs.

I have seen a lot of talk regarding this topic and many people are concerned.  Even if this is true you will still be able to do loans.  i have only done loan in Texas and we have never been able to do a fha cashout to any ltv.  Also, conventional loans are limited to 80%.  I still manage to do loans.

So, this is not the end of the world.

After talking to a few of my Reps it seems like the H4H program is too good to be true for the mortgage broker. Obvisouly it's a real program and all, but what some have said is that most banks are going to market this program to esiting clients with the bad loans and rework it themselves as opposed to just taking the loss on the debt and giving the new loan to another bank. That way they could still keep the improved 90% debt and have a chance to make back some of their money over the life of the loan. If they're going to take a loss on the debt minght as well rework it themselves and try and recoup some of the loss right???

I don't know if that's at all correct but it makes sense.

I agree Victor. It's just a pain in the *** when you get confortable marketing a certain niche or demographic and then that product is taken away. We'll all adapt, we have been constantly since 2006, but it will be nice to have some consistancy sooner than later.

Cash out is nice to 95%, but 85% will not kill our business.  The upsell option in a state with an average loan of $150K has been nice.

I'm hearing new rumors of 90% w/ 95% available to better score borrowers?? Jeez, the freaking Gov't cant spare a billion for loan loss reserves for the FHA but gives banks hunderds of Billions in new capital, what a jokE!

I can't live with 85!!

What would be the point of doing FHA and paying a huge MIP premium at 85%