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ANNOUNCEMENT 08-06
MULTIPLE TOPICS
1. NEW FHA LOAN LIMITS
Effective immediately, Security Atlantic will be partially accepting the higher loan amounts specified in Mortgagee Letter 08-06. We have made a decision not to offer the FHA "Jumbo" product, due to the complexity of the product (LTV and credit score restrictions, price overlays, second appraisals, etc.) and the instability of the guidelines. However, we will honor all of the new limits that do not exceed the old ceiling. Put simply, the maximum loan amount we will allow on a given loan will be the LOWER of the new limit OR the old national high-cost ceiling. For reference, here are the old high-cost ceilings:
|
Old 1 Unit High-Cost Ceiling |
Old 2 Unit High-Cost Ceiling |
Old 3 Unit High-Cost Ceiling |
Old 4 Unit High-Cost Ceiling |
|
$362,790 |
$464,449 |
$561,411 |
$697,696 |
|
Example 1 |
Example 2 |
Example 3 |
|
Butler County, PA Single Family Old high-cost ceiling: 362,790 Old County Limit: 243,200 New County Limit: 327,500 Max Loan Amount: 327,500 |
Cumberland County, NJ Single Family Old high-cost ceiling: 362,790 Old County Limit: 270,750 New County Limit: 420,000 Max Loan Amount: 362,790 |
New York County, NY Two Family Old high-cost ceiling: 464,449 Old County Limit: 464,449 New Limit: 934,200 Max Loan Amount: 464,449 |
2. ELIMINATION OF DPA PROGRAMS
Effective Monday, April 14th, Security Atlantic will no longer accept new submissions if the buyer is using a Down Payment Assistance (DPA). This does not include government entities giving a grant. This decision was based on the mounting evidence that DPAs have between a 200%-300% greater likelihood of default (for recent article, click here). Existing loans in our pipeline will be honored with no deadline to close, although this is subject to change if the FHA or the secondary market imposes restrictions of their own.
3. PROPERTY FLIPS
Effective Monday, April 14th, Security Atlantic will no longer accept submissions if (1) the time period between the seller acquiring the property and the execution of the sales contract is less than one year, and (2) the sales price is increasing more than 25%. This does not include sellers who are already defined exclusions based on HUD guidelines, such as banks and government entities. This decision was based on internal delinquency data reflecting an incidence of default for these loans that is more than 300% greater than the rest of the loan population. We do acknowledge that some loans meeting this criteria do not pose additional risk, so exceptions can be made on a case-by-case basis. Existing loans in our pipeline will be honored with no deadline to close, although this is subject to change if the FHA or the secondary market imposes restrictions of their own.
4. CONVENTIONAL LOANS
Effective Monday, April 14th, Security Atlantic will no longer accept submissions of Conventional (FNMA/FHLMC) loans. We are temporarily eliminating these products from our menu. Existing loans in our pipeline will be honored with no deadline to close, as long as the specific product is not eliminated or otherwise rendered ineligible at the secondary market level.
If you have any questions, please contact your AE. A list of AE contact numbers can be found here.
Thanks,
Noel M. Chapman, EVP