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11:59P.M. Time Is Running Out

The opinions expressed by columnists are their own and do not necessarily represent the views of

It seems that the Federal Housing Association never misses a chance to limit the amount of help they had been giving to the American homeowner. Earlier this year they increased the mortgage insurance on their loans from a number of years, or the time it took, to get your loan to value to 78% to lifetime for any loan that has an amortization over 15 year or 11 years on a 15 year amortizing loan.

The government really wants to limit the FHA's exposure to the market. So why didn't they set a limit each year on the amount of loans they will do and continue the old mortgage insurance policy. The result for the government would be the same, but it would be much better for the borrower, who by the way actually runs the government by exercising their right to vote.

The FHA is lowering the lending limits on January 1st from $729,250 to $625,250 which will affect 650 counties in this country. You are still eligible for the higher limit if you obtain a case number from the Federal Housing Association. Through mortgage companies you can complete the loan next year. There are still some very good reasons to take an FHA loan:

1. When purchasing a property you can do it with 3.5% down;

2. Your relatives can co-sign with you to help you qualify;

3. The rates are as good, or better, than conventional loans except the mortgage insurance won't drop off. When you reach 80% loan to value by paying down the mortgage or having the price of the house rise, or both;

4. The loans are assumable upon sale.

Fannie Mae and Freddie Mac had considered lowering their loan limits but decided to leave them as is. Their underwriting will become more difficult with the advent of Dodd-Frank's "qualified" mortgage which limits the borrower's debt to income limit to 43%, unless their automated underwriting permits a higher limit.

There is still a limited time to live in today's mortgage market which seems to be much better and easier to qualify this year than what appears to be happening next year. As you know it isn't next year yet, but as you have read we already have several major changes. Do not be surprised if we have more changes that won't help the real estate industry.

I don't want to just discuss the problems that might loom in the future without discussing the successes we experience this year. The lending rules have become tougher but we were able to fund loans that weren't possible in the past. Let me list 5 of these super success stories:

1. Funding a $2 million cash out loan on a property whose title was held in an IRREVOCABLE trust. It was a low loan to value, the borrower had large reserves and great credit. The loan was an ARM in the middle 3% range, fixed for 5 years before becoming a variable for the balance of the 25 year.

2. Funding a $1.8 million refinance on a second home with STATED income. (No income documentation needed). Borrower had a good loan to value, good credit and large reserves.

3. Funding a $490,000 FHA refinance for a borrower and co-borrower who are NON OWNER OCCUPIERS. Most borrower do not realize that if you took out an FHA loan as an owner occupied borrower and then move and rented the house, you can refinance it with another FHA loan.

4. Funding a $400,000 REVERSE MORTGAGE for an 80 year old widow who had income of $3100 a month and a mortgage, taxes and insurance payment of $2100 a month. No payments for the rest of her life. She can now eat out with her friends whenever she wants and truly enjoy the rest of her life.

5. Funding a $225,000 15 YEAR LOAN for a young couple who had a 30 year fixed mortgage with 25+ years to go and revolving debt of approximately $20,000. They got a 15 year in the mid 3% range and the payment was less than their current total payments on the revolving debt and the 30 year loan.

We are not out of miracles to solve the tough situations you might be in or your reluctance to do something meaningful for yourself. Best of all we can do these loans in every state in our Country.

It is not December 31, 2013 @11:59 p.m. yet!

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