Changes to FNMA and FHA...for the better?

As we try to navigate through the waters of the housing recovery without drowning, we've seen many changes to the various loan programs and most of those changes haven't made it easier to get a mortgage.  The most recent change by FNMA falls into this category where they eliminated the option to put 20% in order to qualify for a conventional mortgage two years out of a short sale.  This means that if you had a short sale and want to use a conventional loan to finance the purchase of your home, you will now need to wait four years - at which time you can put down as little as 5% assuming you meet the other conventional guidelines.

There is some good news from FNMA.  People who had a foreclosure used to have to wait 7 years in order to qualify for conventional financing EVEN if the mortgage was discharged through a bankruptcy.  For those who have declared bankruptcy and included the mortgage among the debts that were discharged, FNMA will now use the 4 year waiting period from the bankruptcy rather than the 7 year waiting period from the foreclosure to determine when a borrower can qualify to buy a home with conventional financing.  This is especially good considering the fact that foreclosures after a bankruptcy can take months or even a year or two (sometimes more) which means the 7 year foreclosure clock would start long after the BK clock.  Conventional borrowers everywhere can rejoice.  

So What the HAWK is FHA up to?

Word on the street is that FHA is releasing the HAWK (Homebuyers Armed With Knowledge) program sometime in the fall.  This program will provide a financial benefit to borrowers who take a 6 hour class prior to the loan closing and an additional benefit if they take a 1 hour post-closing class.  For those who take the 6 hour class, the up-front mortgage insurance premium will be reduced to 1.25% from 1.75% and the annual mortgage insurance premium will be reduced by 10 basis points from 1.35% to 1.25%.  If you take the 1 hour post closing class, the annual mortgage insurance premium is reduced another 15 basis points to 1.10% for a total of a 25 basis point reduction.  This program is for 1st time home buyers - i.e. people who haven't owned a home in the last 3 years.

I'll let you know when the HAWK program is released.  Please subscribe to the blog so that you can get timely updates like these.  Please also like The Wunderli Team Facebook page for regular updates on the mortgage bond market.  My YouTube channel has videos on a variety of mortgage topics that will benefit Realtors and borrowers alike.  Please check out and subscribe to The Wunderli Team YouTube channel.  Feel free to comment and share.