FHA Purchase Loans Can Be Combined With A California Homebuyer’s Downpayment Assistance Program (CHDAP) “Deferred Payment” Loan Of Up To 3% Of Purchase Price

29 04 2011


  • Purchase a home using an FHA loan and a distribution from a retirement account for the down payment is one option
  • Another option is a California Homebuyer’s Downpayment Assistance Program (CHDAP)
  • CHDAP provides a deferred-payment junior loan – up to 3% of the purchase price, or appraised value, whichever is less
  • It can be used for the down payment and/or closing costs
  • It is offered through the California Housing Finance Agency
  • This loan has no monthly payments and only needs to be paid off when the homeowner sells, refinances or moves out of the home
  • Qualified buyers must meet income and home price requirements and not have owned a primary residence in the last three years
  • The maximum income restrictions are listed, by county, and the combined income for co-borrowers, below: 

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/29/REAM1J98A5.DTL#ixzz1L13OikUd


Homeownership In The U.S. Dropped To 66.4% In First Quarter Of 2011, The Lowest Level Since 1998

27 04 2011

The homeownership rate dropped to 66.4% in the first quarter, the lowest level since the Fourth Quarter of 1998, according to the Census Bureau.

  • The rate is down from 67.1% one year ago
  • The decline is “yet more evidence that Americans are now less able and less willing to buy a home
  • The housing crash has more than reversed the increase seen during the boom
  • The Census Bureau estimated a total housing inventory of 131,009 units across the country in the 1st quarter
  • The homeowner vacancy rate on these properties stayed level at 2.6%; the high rate was the first quarter of 2009 at 2.9%
  • Homeownership varied across the U.S., peaking in the Midwest at 70.4% with a low in the West at 60.9%

For more:  http://www.housingwire.com/2011/04/27/homeownership-falls-to-lowest-level-since-1998

February 2011 “S&P/Case-Shiller Index” Confirms That U.S. Home Values Declined Average 3.3% In 19 Major Metropolitan Areas

26 04 2011
“…The 20-city composite is within a hair’s breadth of a double-dip…” 
  • All but one of the 20 cities in the index showed a year- over-year decline of 3.3%
  • Phoenix had the largest decline with an 8.4 percent slump
  • Minneapolis declined 8.3 percent
  • The Washington DC area bucked the trend with a 2.7 percent increase from a year ago
  • 10 markets saw new lows in housing prices from their 2006, 2007 peaks including Atlanta, Chicago, Las Vegas, Miami and New York
  • The 20-city index fell in February to 139.27, compared with a recession low of 139.26, reached in April 2009.

Home Prices: Feb 2011 Vs. Feb 2010

Atlanta – 5.8 percent
Boston -1.0 percent
Charlotte – 5.0 percent
Chicago – 7.6 percent
Cleveland – 2.9 percent

Dallas – 1.2 percent
Denver – 2.6 percent
Detroit – 3.7 percent
Las Vegas – 5.0 percent
Los Angeles – 2.1 percent

Miami – 6.2 percent
Minneapolis – 8.3 percent
New York – 3.1 percent
Phoenix – 8.4 percent
Portland – 7.0 percent

San Diego – 1.8 percent
San Francisco – 3.5 percent
Seattle – 7.5 percent
Tampa – 6.0 percent
Washington + 2.7 percent

20-city composite – 3.3 percent

Homebuyers Need To Purchase Homes With Potential To “ADD” Value Through Renovation And Home Improvements As House Values Look To Remain Weak Through Spring Of 2012

25 04 2011
  •  Morgan Stanley predicts U.S. home prices will fall 6 percent to 11 percent in 2011
  • This correlates to a 39 percent drop from their 2006 peak through the spring of 2012
  • Morgan Stanley previously estimated values would drop 35 percent from the peak
  • The greater home price decline will come from a combination of non- distressed price declines and a shift-in-mix toward more distressed sales
  • Distressed homes sale prices appear to have stabilized while non-distressed prices are accelerating their rates of decline
  • The S&P/Case-Shiller index of 20 U.S. cities will probably show tomorrow that prices fell 3.3 percent in February from a year earlier
  • The measure was down 32 percent in January from its July 2006 peak
  • The following is the list of major reasons homes prices will continue to decline:
  1. A large supply of delinquent and bank-owned properties
  2. Uncertainty about home-finance and foreclosure regulations
  3. Proposals to reform mortgage companies Fannie Mae and Freddie Mac
  4. Requirements under Dodd-Frank legislation that lenders hold a percentage of mortgages
  5. Negotiations with state attorneys general to settle foreclosure disputes may further depress prices

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/04/24/bloomberg1376-LK7OFX0YHQ0X01-1UUCNLHJA14V3H5QNVBG6FGE65.DTL#ixzz1KYG2WhG7

“Short Sale Or Foreclosure”: Homeowners Will See FICO Scores Fall To 570-595 Range With Either Strategy; Credit Scores Will Take Up To 7 Years To Increase Back To Previous Levels

25 04 2011



  • FICO will not be higher if homeowners choose “short sale” over foreclosures
  • Mortgage delinquency data from the nation’s three major credit bureaus was used to make this decision
  • Potential borrowers with short-sales will have FICO scores in the 575-to-595 range at one credit bureau
  • This is  the same as having a foreclosure on their credit report
  • FICO scores will be either in the 570-to-590 range or the 620-to-640 range at the two other credit bureaus
  • Short sales and foreclosures will remain on credit reports for three-to-seven year credit restoration

For more:  http://www.housingwire.com/2011/04/22/short-sales-and-foreclosures-equally-degrade-fico-scores

FHA Underwriting Standards Will See Renewed Focus On The “3 C’s Of Mortgage Lending”: A Borrower’s Credit, Collateral And Capacity

24 04 2011

“…Steps taken to hone our underwriting standards in the past year have allowed FHA to materially strengthen its balance sheet and to further strengthen its capital reserves…” 

 Written Testimony of Bob Ryan, Acting Assistant Secretary for Housing and FHA Commissioner
U.S. Department of Housing and Urban Development (HUD)

  • The importance of strong underwriting standards and heightened due diligence will remain paramount
  • FHA will continue to focus on the “3 C’s” of lending: credit, collateral and capacity
  • A borrower’s capacity to repay a loan, a buyer’s credit experience, the value of the property being financed, and the type of mortgage
  • The borrower’s credit history includes scanning for foreclosures, bankruptcies, liens and/or judgments, mortgage delinquencies, credit delinquencies, repossessions, collections, or charge-offs. It means verifying credit accounts, their type, age, limits, usage and the status of revolving accounts
  •  The collateral means an accurate and objective appraisal of the property and assessing the down payment structure (LTV)
  • The borrower’s capacity means verifying monthly housing expense-to-income ratio or monthly debt payment-to-income ratio, confirming employment and income, identifying cash reserves and weighing that against the characteristics and purpose of the loan type considered
  •  The above-mentioned items will allow a lender to properly identify responsible borrowers that can achieve sustainable mortgages
  • Strong underwriting has been at the core of FHA’s success. Because FHA insures lenders against losses that may result in the event of a borrower default, that commitment is made under the condition that lenders are required to abide by extensive documentation and underwriting guidelines to originate sustainable mortgages
  • Lenders are also required to provide loss mitigation opportunities to help borrowers avoid default or foreclosure

For more:  http://portal.hud.gov/hudportal/HUD?src=/press/testimonies/2011/2011-04-14

FHA Loans Will Continue To Offer Higher Debt-To-Income Ratios, More Flexible Underwriting, Lower Down Payments And FICO Scores As Private Mortgage Insurance (PMI) Seeks Higher Income Borrowers With Credit Scores Over 720

23 04 2011


  • FHA continues to offer much higher and more flexible maximum debt-to-income ratios, far more generous underwriting and lower down payments, and will accept FICO scores that conventional lenders and private insurers won’t touch
  • The FHA put its second premium increase in six months into effect Monday
  • Private mortgage insurance (PMI) now offers significant monthly savings when compared with the FHA
  • The Obama Administration is pushing for greater private-sector involvement in the mortgage arena
  • First-time homebuyers are now needing larger cash resources or higher credit scores to qualify for loans
  • Some analysts are forecasting a 5 percent minimum down payment, up from the current 3.5 percent
  • FHA’s maximum loan amounts might also drop significantly this October if Congress does not renew the $729,750 “high-cost area” limit
  • Radian Guaranty, a major Private Mortgage Insurer, claims a 15 percent savings over FHA for borrowers with FICO credit scores above 720
  • A FICO score above 720 with a $285,000, 30-year loan with 5 percent down at a 5 percent interest rate would have an FHA mortgage costing $1,806 in principal and interest per month as compared with a Radian loan with $1,530 a month to $1,753, depending on the type of premium payment plan you choose
  • The lower cost PMI choice would have upfront cash payment of the insurance premium while the higher-cost alternative would involve standard monthly payments of the premium
  • PMI will be cheaper than FHA when the buyer puts down 5 percent and has a FICO score of 720 or higher or puts down 10 percent and has at least a 680 FICO score
  • The majority of FHA buyers can’t fit into the private insurers’ high-FICO, strict underwriting model