Transcript Slide 1

FHA’s Role in the Mortgage Market
o The FHA-insured share of all home purchases has been
above 17 percent since July 2008.
o It has not been this high since 1990.
o The FHA share of new home sales is 24 percent.
o FHA’s mortgage market share is somewhere between 25
and 30 percent, based on dollar volumes.
o In 2006 it was around 2 percent.
www.fha.gov
FHA’s Role in the Mortgage Market
(Source: US Department of HUD, National Association of Realtors,
and US Bureau of the Census)
FHA-Insured Share of all Home Purchases, 1989-2008
By Fiscal Year
By Month
20.00
15.00
10.00
5.00
FY
19
89
19
9
FY 1
19
9
FY 3
19
9
FY 5
19
9
FY 7
19
9
FY 9
20
0
FY 1
20
0
FY 3
20
0
FY 5
20
0
20 7
07
.1
20 1
08
.0
20 1
08
.0
20 3
08
.0
20 5
08
.0
20 7
08
.0
9
0.00
FY
Percentage of Home Sales
25.00
www.fha.gov
FHA’s Role in the Community
o Help families achieve their “American Dream” (Homeownership)
o First-time homebuyers
o Minority groups
o Elderly and disabled
o
o
o
o
o
Create an educated consumer – housing counseling
Stabilize and rehabilitate communities
Promote economic growth
Preserve neighborhoods
Help increase the value of the property (Equity)
www.fha.gov
Welcome to FHA
MISSION STATEMENT
“Promote affordable housing by helping people
underserved in the private sector with homeownership,
rental housing and health care facilities. We will
accomplish this by providing consumer education,
quality mortgage insurance products to the financial and
real estate communities and best-in-class customer
service.”
www.fha.gov
Welcome to FHA
Office of Business Development
Strategic Customer-Focused Mission
“To strategically align with and tactically support FHA
industry customers while educating the end user
community about the value of FHA programs.”
o Customer-centric business model
o Cross-functional teamwork and matrix management
o Coordinated approach to the market
www.fha.gov
►
FHA Business Model
Consumers
• Homebuyers
• Developers
The Market
FHA Customers
• Lenders
• Industry Influencers
FHA Listening Posts
MAR-COM
Team
Customer
Liaison
Team
HOC/Field/
HQ
Market
Research
Customer/Industry Intelligence
• Customer Requirements, Needs, Preferences , Expectations
• Evolving Industry Patterns
Enabling
Infrastructure
K.P.I.s
Dynamic
Customer
Knowledge
Web Portal
Process and Technology
• FHA Business Processes
− Business Process Reengineering
• CRM, Business Intelligence Apps
►
Marketing
Channels
www.fha.gov
FHA Outreach & Education
Investments in New Programs and Infrastructure
1. Customer
Liaison
−
−
Lender-focused
−
4-tiered program
SAS business
intelligence
−
Upgrading of GIS
mapping capability
−
−
−
Co-Branding
Geographic
coverage by
named customer
Systems
5.
Systems
−
−
2. Market
Data & BI
−
3. Marketing &
Communications
4. Quality
/BPR
New Web Portal
Advertising campaign
FHA.gov
New Customer
Relationship
Management (CRM)
−
−
Lean office BPR
Customer participation
in re-engineering
www.fha.gov
Customer Liaison Program
 Geographic coverage by named
customer
 Four-tiered program
Customer
− Strategic: Senior Customer Liaison −
Customer Advocate
− Tactical: Customer Liaison
− Day-to-day: 1-800-CALL-FHA
− 24x7: FHA.gov
www.fha.gov
Customer Liaison Program
continued

−
−
−
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Primary point of contact for:
Strategic planning
Marketing communications
and planning
Communicating customer
concerns to policymakers
Training, education, and
brand awareness building
Major event support
Timely FHA-related
information

Information source

Self-service– automated process
Customer
 Handle origination, servicing,
and asset management
issues
 Support training and
education delivery
 Event support
 Distribute FHA information to
customers
 Support Senior Customer
Liaisons

Solve day-to-day issues
www.fha.gov
What is FHA?
An FHA-insured mortgage is a viable option for all. A
mortgage product tailored to the buyer's needs benefits
everyone…
o The homeowner can afford the payments – low costs
o The homeowner is happy and satisfied
o A happy homeowner refers family and friends to you,
their real estate agent or broker
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
FHA Overview
o
FHA was established in 1934 and
became a part of the U.S.
Department of Housing and
Urban Development in 1965
o
FHA is the U.S. Government’s
largest insurer of loans - 4.68
million loans in portfolio
o
FHA offers mortgage insurance to
protect lenders in event of
borrower default
o
FHA does not:
o
Originate, close, fund, or service
loans
o
Set the interest rate
o
Determine fees and charges
o
Have income limits
The insurance protection allows
lenders to originate mortgages to
those who may not qualify under
conventional guidelines
www.fha.gov
What About FHA Loans?
o Let FHA Loans Help You & Your Buyer
o Find an FHA-approved Lender
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
Advantages for Buyers
o Smaller Down Payment – 3½%
o Flexible Down Payment Sources - evidence
o No Maximum Income or Sales Price Limits – (Subject to
Maximum Loan Limits)
o Buyer doesn’t need to have perfect credit
o No Prepayment Penalty
o Loss Mitigation options
o Standard MIP
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
FHA Benefits
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Fully Amortizing Loans – Fixed & ARM
Automated and Manual Underwriting
Traditional and non-traditional credit
Low Down Payment – can be Gifted or Borrowed
Assumable loan
Ability to Streamline Refinance without Credit Qualifying
Loss Mitigation options – financial incentives for lender
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
Borrower Characteristics
o
o
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Owner-Occupant only
Co-borrowers (occupying and non-occupying)
Co-signers
Citizenship not required; SSN is required
No maximum age
No income limits
www.fha.gov
FHA Modernization
Legislation
Housing and Economic Recovery Act of 2008
o Changed Down Payment – 3½% (Loan Amount is 96.5% of SP or
Appraised Value, whichever is less)
o Eliminated Seller-funded Down Payment Assistance
o Moratorium on Implementation of Risk-Based Premiums – protect
the borrower
www.fha.gov
FHA Modernization
Legislation
o Condominium Project Approvals – eliminates environmental review
o Tax Credit for first-time homebuyers
o HECM for Purchase – seniors can purchase a home and convert to HECM
in single transaction thus reducing closing costs
o HECM Maximum Loan Limit - $417,000
o HECM Counseling Requirements – only trained and tested counselors
who follow uniform protocols
o Independence of HECM Mortgage Originators – requires all parties
participating in origination to be approved by FHA
o Prohibition against requirements to purchase additional products as
a condition for HECM eligibility
www.fha.gov
FHA Modernization
Legislation
o Energy Efficient Mortgages – increases amount of home modification
costs that can be included in mortgage to 5% of property value
o Mfg. Housing (Title I)
-
$25,090
$69,678
$92,904
$23,226
–
Raised Maximum Mortgage amounts to:
for Repair/improvements
Unit
Unit and Lot
Lot only
www.fha.gov
FHA Modernization
Legislation
o FHA Rescue Plan – Authorizes a new FHA “Hope for
Homeowners” program to refinance existing borrowers
into fixed-rate FHA mortgage products (only for loans
originated on or before January 1, 2008)
o Neighborhood Stabilization Program – State block grant
funds to be spent for the redevelopment of abandoned
and foreclosed homes and residential properties
www.fha.gov
What This Means for You?
o Higher Income Limits, Higher Sales Prices, Larger Loan
Amounts
o Client and Market Expansion
o More opportunities for the Industry
o More business for you!
o More Options for More Consumers
o More Sensible Mortgage Products
o Simplification of Lending Process
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
FHA Mortgage Limits
o Established by law and based on the Metropolitan
Statistical Area
o Revised on January of each year
https://entp.hud.gov/idapp/html/hicostlook.cfmwww.hud.gov
www.fha.gov
FHA Programs/Products
o 203(b) - Fixed Rate/ARMs
(most popular)
-Purchase
-Refinance – Cash-out (95%)
o 234 (c) - Condominiums
o 203(k) - Rehabilitation
o HECM for Purchase
(“Reverse Mortgage”)
o Energy Efficient Mortgage
o HUD Homes - REOs
o Manufactured Homes
-Standard
-Streamlined
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
FHA Programs/Products:
Rehabilitation Mortgages
Standard (structural)
Streamlined (minor)
o Repairs/Improvements must
be at least $5,000
o Consultant required
o Architectural Exhibits required
o Borrower can make
repairs/improvements if
qualified
o Facilitate uncomplicated
repairs/improvements
o No consultant required
o No architect required
o Borrower can make
repairs/improvements if
qualified
o Include up to $35,000
www.fha.gov
FHA Programs/Products: Home
Equity Conversion Mortgage (HECM)
o
o
o
o
o
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Borrower – seniors age 62 or more
Reverse Mortgage counseling required
Property – 1-4 family dwellings, existing only
Owner–Occupied only; within 60 days from closing
FHA’s Property Flipping prohibitions apply
Repayment not required until home is no longer occupied by
borrower (nursing home, death). At that time, if the value has
declined so that there is insufficient equity to repay FHA, then FHA
will take the loss. If the value has increased over and above what
is owed to FHA, that excess will be distributed to the heir(s).
www.fha.gov
FHA Programs/Products:
Energy Efficient Mortgage (EEM)
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Eligible for new or existing 1-4 family units
Maximum Loan in Area Can Be Exceeded by the EEM Amount
Eligible for use with Rehabilitation Mortgages (203K)
Available for Condos and Manufactured Homes
Cost of improvements that may be eligible for financing is either
5% of the property’s value (not to exceed $8,000) or $4,000,
whichever is greater.
www.fha.gov
HUD HOMES
www.fha.gov
Selling HUD Homes
o
o
o
o
o
What are HUD Homes?
Register to Sell HUD Homes
Electronic Internet Bidding
Current Listings
Management & Marketing Contractors
www.fha.gov
What Are HUD Homes?
o HUD-owned houses are often referred to as “HUD
Homes.” HUD Homes are houses that had an FHAinsured mortgage and the homeowner defaulted. The
lender then deeded the home to the Secretary of HUD
in exchange for an insurance claim payment.
www.fha.gov
It’s Easy to Sell HUD Homes
o Brokers can register with HUD’s M&M Contractor for Florida
properties, National Home Management Solutions through
their website, www.nhmsi.com
o Once completed, the broker can show, advertise, and submit offers
on HUD Homes
o HUD pays the broker a commission of up to five (5) percent
o HUD-registered brokers and their agents are able to submit bids
24/7 over the Internet. Electronic bidding is the only method to
submit bids for HUD Homes
www.fha.gov
www.fha.gov
How to Become a HUDApproved Lender
FHA Lender Approval Types:
(Six Types of FHA Lenders)
o Nonsupervised Loan Correspondent
Mortgage Broker, Mortgage Lender or
Correspondent Lender
o Nonsupervised Mortgagee
Mortgage Lender & Correspondent Lender
o Supervised Mortgagee
Banks and Credit Unions
www.fha.gov
How to Become a HUDApproved Lender
o Supervised Loan Correspondent
Banks and Credit Unions
o Investing Mortgagee
Entities that only want to own FHA loans
o Government Mortgagee
Federal, State and Local Agencies
www.fha.gov
Ways Lenders Can Participate
in FHA Loan Programs
o Originate
All lender types can originate except Investing
Mortgagees
o Underwrite Single Family Loans
Supervised, Nonsupervised and Government
Mortgagees can underwrite once they obtain DE
(Sponsor Mortgagee) approval from one of the
Single Family Homeownership Centers
www.fha.gov
Ways Lenders Can Participate
in FHA Loan Programs
o Underwrite Mutifamily Loans
Supervised, Nonsupervised and Government
Mortgagees can underwrite once they obtain MAP
approval from Multifamily Headquarters
o Service
Supervised, Nonsupervised and Government
Mortgagees can service all types of loans.
o Hold
All types of lenders can hold (own) except Loan
Correspondents
www.fha.gov
Ways Lenders Can Participate
in FHA Loan Programs
Non-supervised Loan Correspondent
o Only one for mortgage brokers to originate
o Correspondent lenders and mortgage lenders who
only want to originate
Non-supervised Mortgagee
o In addition to origination: can underwrite, service
and own any type of FHA loan
www.fha.gov
Ways Lenders Can Participate
in FHA Loan Programs
Supervised Loan Correspondent
For banks, savings bank and credit unions that only
want to originate FHA loans
Supervised Mortgagee
For banks, savings bank and credit unions that want
to originate, underwrite, service and own any type of
FHA loan.
www.fha.gov
Ways Lenders Can Participate
in FHA Loan Programs
Government Mortgagee
Government agencies that want to originate,
underwrite, service and own FHA loans
Investing Mortgagee
Any entity that only wants to own FHA insured loans
www.fha.gov
How to Become an FHAApproved Lender
o The FHA lender approval requirements vary from
different levels and types of lender participation
o The first step is to obtain an application package:
– Title II Lender Application Package
(for home purchases, refinances and reverse mortgages)
– Title I Lender Application Package
(for home improvement loans)
www.fha.gov
Title II Mortgagee Application
Package
o Cover Sheet - Payment of Title II mortgagee
application fee - $1,000 fee except for Gov’t mortgagee
o Application Form for lender approval - HUD 11701
o Handbook 4060.1 - Approval requirements &
procedures
www.fha.gov
Title II Lender Application
Package – Cover Sheet
APPLICATION FEE for TITLE I LENDER APPROVAL
This form MUST accompany all application fee payments. Mail this form and your
check to: HUD, P. O. Box 198608, Atlanta, GA 30384. A copy should be included with
your application.
____________________________________________________________ Lender
Name
________________________________________Federal Tax Identification Number - 10
digit
_______________________________________ HUD/FHA Identification Number - 10
digit
(if applicable)
Type of application: (please check the appropriate box)
_____ Initial Application ($1,000)
_____ Additional Branch ($300)
_____ Additional Sponsor ($300)
_____ Conversion of Mortgagee Type ($300)
Lenders seeking first time approval (initial applications) must enter their federal tax
identification number in the memo portion of the check. Lenders filing all other types
of applications should put their 10 digit HUD/FHA identification number in the memo
portion of the check.
www.fha.gov
Form HUD-11701
Application for Approval: FHA Lender and/or Ginnie Mae Mortgage-Backed Securities Issuer
U.S. Department of Housing and Urban Development
Federal Housing Administration and
Government National Mortgage Association
OMB Approval No. 2503-0033
(exp. 09/30/2010)
Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing
data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
The information requested on this form is required by 24 CFR Part 202 and Sec. 306(g) of the National Housing Act or by HUD Handbooks 4060.1 and 5500.3. The
information collected assists FHA and Ginnie Mae in determining which lenders should be approved to participate in the FHA single and multifamily insurance programs
and/or the Ginnie Mae Mortgage-Backed Securities Program. It is used to help FHA minimize its risk in insuring single-family and multifamily mortgages and Ginnie Mae
to minimize its risk. Applicants are not required to respond to this collection of information unless a current OMB approval number is displayed on the form.
Privacy Act Statement. Names and Social Security Numbers are requested in order for the Department to obtain positive identification of the applicant’s officers,
directors, stockholders and employees who have authority to obligate the applicant. The information requested will be used solely to determine the eligibility of the
individuals to participate in the Department’s mortgage insurance programs. The Department is authorized to request this information by Executive Order 9397. The
information collected will not be disclosed outside the Department except as required by law.
The Social Security Numbers are provided to HUD on a voluntary basis. Failure to provide this information could cause delay in processing of the applications.
Instructions for Completing Form HUD-11701
Applicants seeking qualification as a FHA-approved lender/mortgagee or loan correspondent under the Title I and/or Title II programs and/or as an approved issuer with
the Government National Mortgage Association (“Ginnie Mae”), must complete the appropriate sections of this form.
Qualified applicants may obtain one of the following three types of approval:
1. FHA Approval Only
Replaces HUD-92001, 92001-D and LD Page i form HUD-11701 (11/2008)
ref. Handbooks 5500.3, Rev. 1 and 4060.1
www.fha.gov
FHA Title II Mortgagee Approval
Handbook 4060.1, REV-2
Chapter 2 - Part A. Requirements for all
Mortgagees
Acceptable Business Forms
o Be a Corporation, Limited Liability Company (LLC) or Partnership
that meets FHA’s Requirements
o Have State License, State DBA, if applicable
www.fha.gov
General FHA Approval
Requirements
Owners and Officers
o Cannot be debarred, suspended or otherwise
ineligible (Certify via Sanction Letter)
o 3 years of experience required (at least one officer)
o Cannot be self employed in the mortgage or real
estate industry or related field
www.fha.gov
General FHA Approval
Requirements
Staffing
o At least two full time employees
o A shared receptionist is permitted but cannot be used
to meet this requirement
o All employees (except shared receptionist) must be
paid by W-2
o No outside or self employment in the mortgage or
real estate industry or related field
www.fha.gov
General FHA Approval
Requirements
Office Facilities
o Must be separate and apart from any other entity in
commercially zoned space
o Can share reception areas with other companies
o Must be clearly identified to the public with a
permanent business sign
www.fha.gov
General FHA Approval
Requirements
o Quality Control Plan except Investing Lender
o Audited Financials and Adjusted Net Worth
www.fha.gov
Net Worth Requirements For
Nonsupervised Applicants
o $63,000 Net Worth for Nonsupervised Loan
Correspondents (20% must be Liquid Assets)
o $250,000 Net Worth for Nonsupervised
Mortgagees (20% must be Liquid Assets)
www.fha.gov
Funding Requirements For
Nonsupervised Applicants
o Documented $1,000,000 funding program for its
originations
o Loan Correspondent applicants may provide a
funding letter from their Sponsoring Mortgagee
www.fha.gov
Additional Requirements For
Loan Correspondents
o Must Have a Sponsoring (DE) Mortgagee to Underwrite
the Originations
o Sponsor (DE) can also fund the Originations
o A sponsor of a loan correspondent must be a DE
mortgagee. The sponsor is responsible for the actions of
each of its loan correspondents in originating FHAinsured mortgages
o A sponsor must supervise and perform quality control
reviews of each of its loan correspondents
www.fha.gov
Application Submission
o The application form 11701 has all the information on
what is required for each type of approval
o Application fee and copy of the application are sent to
the Atlanta Office. Application is sent to the Lender
Approval and Recertification Division in Washington, DC
o Currently it is taking 60 days to process an application
www.fha.gov
FHA Lender Approval Common
Mistakes
o HUD Form 11701 sections A, B, C and Supplemental
must be COMPLETE, CONSISTENT and ACCURATE
o Note application and application fee go to two different
places
o Evidence of acceptable facilities
o Branch Office - remember you must have at least one
full time employee in each branch
o Credit reports are missing in application packages
o Credit reports are needed by all except supervised
institutions
www.fha.gov
FHA Lender Approval
Common Mistakes
o Audited financials, most current CPA prepared audited
financial statements for the period ended not more
than 12 months prior to submission of the application
o Review for Fair Lending Issues/Compliance
o
o
o
o
o
Fair Housing Act
(ECOA) Equal Credit Opportunity Act
(TILA) Truth In Lending Act
RESPA
Home Mortgage Disclosure Act
www.fha.gov
FHA Lender Approval Common Mistakes:
Quality Control (QC)
QC Plan deficient (Don’t just buy a plan)
“All FHA approved mortgagees, including loan correspondents,
must implement and continuously have in place a Quality Control
Plan for the origination and/or servicing of insured mortgages as a
condition of receiving and maintaining FHA approval.”
o Quality Control for SF Origination, SF Servicing
o Quality Control from Beginning to End
www.fha.gov
Quality Control (QC) Goals
Mortgagees must design programs that meet these basic goals:
o Assure compliance with FHA’s and the mortgagee’s own origination
or servicing requirements throughout its operations
o Protect the mortgage and FHA from unacceptable risk
o Guard against errors, omissions and fraud
o Assure swift and appropriate corrective action
Failure to comply with specific QC requirements may result in
sanctions and the imposition of Civil Money Penalties by the
Mortgagee Review Board.
www.fha.gov
Basic Elements of QC
o
o
o
o
o
o
o
o
o
o
o
o
Plan Form and Execution
Independence – In-house staff, outside firms
Qualified Staff
Timeliness
System of Loan File Review
Adequate Scope and Sampling
Site Review – Items, frequency, staffing
Affiliate Review by Sponsors
Reporting and Corrective Action
Notification to HUD
File Retention
Restricted Participation
www.fha.gov
Helpful References
o How to Become a FHA Lender web page:
http://www.hud.gov/offices/hsg/sfh/lender/lendappr.cfm
o Annual Renewal Requirements at:
http://www.hud.gov/offices/hsg/sfh/lender/renewal.pdf
www.fha.gov
Other Resources
www.fha.gov
Current Listings
Listings of HUD Homes are available through:
www.hud.gov/homes
MLS
M&M Internet sites
www.homesales.gov
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
Help for Your Buyer
o HUD Home Buying Guide
o Housing Counseling
o Increased FHA Mortgage Loan Limits
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
Helpful Resources –
fha.gov
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
hud.gov
3
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
Contacting FHA
Websites
FHA Call Center
www.fha.gov
800-Call FHA
www.hud.gov
Live Web Chat
www.espanol.hud.gov
TBA
www.fhaoutreach.gov/fhafaq
Locate a Housing Counselor
800-569-4287
To Sign Up on FHA’s List serve
[email protected]
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov
FHA’s Commitment to Our
Partners
o FHA’s goal is to provide Safe and Affordable Mortgage
Products that Support Sustainable Homeownership
o FHA recognizes the Key Role the Real Estate
Professional and the Mortgage Brokers play in the
Mortgage Finance Industry
1-800-Call FHA
FHA - Serving Homebuyers Since
1934
www.fha.gov