JMAC’s staff and our brokers know that there will be changes in lending in 2015 – some good and some not. Good or bad, it is important to know the events and trends that shape lending – it is an ever-changing landscape.
Starting January 1 the maximum VA loan limit will be reduced to the high balance conforming limit. Until December 31, 2014 a veteran can purchase a home in several counties in California for $1,050,000 with no money down. That amount will change for contracts dated on or after January 1, 2015 to $625,500. That is a big difference although many lenders report that they do few VA loans over $650,500.
On the other side of the coin, recently Fannie Mae and Freddie Mac resurrected the 97% LTV program. This is only for conforming loans amounts, 1 unit properties. JMAC welcome this change because FHA is expensive with respect to the upfront and monthly MIP. Couple that with not being able to cancel the MIP with FHA (unless you put 10% or more down payment, then you have to live with the MIP for 11 years) and the FNMA 97% LTV program is more advantageous. Our brokers know that with conventional loans the cost of the mortgage insurance varies depending on a borrower’s credit score. With a 760+ score a borrower would be looking at 1.05% for mortgage insurance and with a 679 score the cost would be 1.48% (higher than FHA).
FHA is not extending the waiver that will allow flipped properties to be sold in less than 90 days. This waiver has been in effect for 5 years with no substantive problems being reported with cases exercising this wavier. Hopefully flippers will take about 90 days to flip a property so that FHA buyers still have a shot at these houses.
But there is good news from the FHA. If a Realtor has ever represented a seller that had an FHA loan it was essential that it was closed at the end of the month because FHA always charged interest for a full month. On or after January 21, 2015 this dinosaur of a policy of collecting a full month of interest is finally going away and payoff of an FHA loan will be treated just like a conventional loan.