FHA BROKERS FEES jump from 1% to 2.5%??? (home loan, 401k, approval, credit score)

[akidrockmom]

Let me try to put this all in a nutshell and maybe someone can give me some insight. Got automated approval for FHA, with possibly using calpers as down payment, however we do have funds for the 3.5% down. Seller would need to pay closing costs..Anyway
We were waiting for the approval from the underwriter and I got a call on Friday from Nice Loan Lady..She said everything looked good, just needed a few more docs. Then springs on me that starting Feb 16, which is a holiday and I am speaking to her on Friday the 13th, that if we don't have a property by the 16th..that the lender origination fee will go from 1% to 2.5%, for credit scores between 580 and 599, which of couse is where we are. Then she said if Calpers didn't raise there rates than she could not charge me. Does anyone know what that means? A few things have crossed my mind.
1. When we did the application and GFE, wouldn't you have mentioned this Feb16 some rates may go up?
2. On an FHA loan isn't the max Lender Orig Fee 1%?
3. Why or how could she inform me of this saying I have 3 days to secure a property and yet she is closed on the day the fee goes up?
I think thats pretty crappy. So I tell my realtor and she say "WHAT?" I haven't heard anything like that..So she calls another loan lady that she knows, that does the same loans, and she not not heard one thing about this. So, I'm trying to figure out whats going on. Did she forget to put something in the GFE and is now trying to backtrack to put the fee in?
We have been trying to get a home loan for many years and have been turned down year after year. We were so thrilled we got an automated approval and we felt she pulled off a miracle, I am hesitant to go somewhere else. Can I even go somewhere else?
Okay thats my nutshell, its a big one, but I keep reading on here that responders need/want more details, so here you go. Bring on the replys the suggestions..anything!

[bornandraised atl]

I think what your Nice Loan Lady was talking about is that here investors are raising the "price" for any FHA loan with scores between 580-600.....let me 'splain...

When you look at a rate sheet it will have two columns - rate & price: (completely made up figures)

Rate Price
5% +1.0%
5.25% 0%
5.5% -1.0%

What this means is that if you want a rate of 5% then you have to pay 1% in loan discount to get that rate. If you get 5.25% then it does not cost any discount. If you get a rate of 5.5% - then it pays the lender 1%. These prices change everyday sometimes during the day.

This is how the rate sheet works - next you have adjustments to this rate and price sheet. some lenders have FHA price adjustments based on credit score. for example: scores between 580-599 add 1.5% to price 600-619 add 1% to price....so if your score falls into one of these categories then you are subject to the increases.....the lender has a two choices - charge you the difference and keep your rate the same or increase your rate and not charge you the difference.

These changes happen all the time --- and as a lender we are giving short notice sometimes too.

The change in the price for credit score ranges are not FHA rules -they are rules of each lender. Price adjustments can be implemented at any time for reasons determined by each individual lender.

Credit scoring is more and more important now --- the fact is that lower credit scores have higher default rates and lenders are pricing the risk accordingly.

I hope that helps.

[bornandraised atl]

sorry ;let me answer your questions...

1. - I would have if I had known the changes that would be happening - the person may not have known
2. - yes I believe max origination is 1% (I have never charged more than 1% orig. fee so I can't say for sure) a more appropriate place would be to list it as a discount -- a good faith estimate is just that - estimate - a total of 2.5% may be charged - 1% origination 1.5% discount. At this point if the fees have been disclosed to you, you can make comparisons.
3. - She is more than likely informing you of the changes to the price and for it to not effect you you have however may days to write a contract. The markets are closed on Monday for Pres. Day...as far as the fees going up on a holiday---that is just circumstance.


If you want to shop around --- that is ok --- just ask if they have adjustments to the rate for credit scores --- my company has the same adjustment for FHA loans with score between 580-599....I do know a few --- and they are a dwindling few - companies that do not have any adjustments for scores. So you can ask around --- I would not suggest having other folks pull your credit at this point since you have an approval now ----just ask the right questions first---and hang in there

[Ultrarunner]

It was all over the Sunday morning news broadcasts... something to the effect of loans becoming more costly for many...

New combination of credit score, down payment amount and even if the purchase is a condo or single family or duplex.

One analyst said this may cause some buyers to cancel due unforeseen increased cost.

I really starting to get a distaste for everything financial... loans, banks, brokers... 401k's, etc...

The reality is you probable don't have a choice if you want to go forward and only you will know...

Banks pay next to nothing on deposits and lend out the money 10 or more times what they pay and they still go under

[altus2006]

Originally Posted by Ultrarunner

It was all over the Sunday morning news broadcasts... something to the effect of loans becoming more costly for many...

New combination of credit score, down payment amount and even if the purchase is a condo or single family or duplex.

One analyst said this may cause some buyers to cancel due unforeseen increased cost.

I really starting to get a distaste for everything financial... loans, banks, brokers... 401k's, etc...

The reality is you probable don't have a choice if you want to go forward and only you will know...

Banks pay next to nothing on deposits and lend out the money 10 or more times what they pay and they still go under

There is still nothing available for people who want to buy properties that need extensive repairs either. The FHA program (203k) has so many fees that add dramatically to the loan that it is mostly useless.

The housing scene is still a quagmire.

altus2006

[Ultrarunner]

Originally Posted by altus2006

There is still nothing available for people who want to buy properties that need extensive repairs either. The FHA program (203k) has so many fees that add dramatically to the loan that it is mostly useless.

The housing scene is still a quagmire.

altus2006

Agreed... the only way I been able to buy fixers is to pay cash or with Seller Financing...

More that one occasion, my cash offer was 25% less than my offer including Seller Financing... almost always, the seller choose cash.

[altus2006]

Originally Posted by Ultrarunner

Agreed... the only way I been able to buy fixers is to pay cash or with Seller Financing...

More that one occasion, my cash offer was 25% less than my offer including Seller Financing... almost always, the seller choose cash.

I was really shocked after finding out that it is impossible to get cash out financing for 6 months after purchasing with cash. This reg seems really dumb to me, especially with banks needing to get the repos off their books and then they do not offer any financing for their bow-wow properties.

Another "Stupid is as stupid does" scenario.

altus2006

[altus2006]

Originally Posted by akidrockmom

Let me try to put this all in a nutshell and maybe someone can give me some insight. Got automated approval for FHA, with possibly using calpers as down payment, however we do have funds for the 3.5% down. Seller would need to pay closing costs..Anyway
We were waiting for the approval from the underwriter and I got a call on Friday from Nice Loan Lady..She said everything looked good, just needed a few more docs. Then springs on me that starting Feb 16, which is a holiday and I am speaking to her on Friday the 13th, that if we don't have a property by the 16th..that the lender origination fee will go from 1% to 2.5%, for credit scores between 580 and 599, which of couse is where we are. Then she said if Calpers didn't raise there rates than she could not charge me. Does anyone know what that means? A few things have crossed my mind.
1. When we did the application and GFE, wouldn't you have mentioned this Feb16 some rates may go up?
2. On an FHA loan isn't the max Lender Orig Fee 1%?
3. Why or how could she inform me of this saying I have 3 days to secure a property and yet she is closed on the day the fee goes up?
I think thats pretty crappy. So I tell my realtor and she say "WHAT?" I haven't heard anything like that..So she calls another loan lady that she knows, that does the same loans, and she not not heard one thing about this. So, I'm trying to figure out whats going on. Did she forget to put something in the GFE and is now trying to backtrack to put the fee in?
We have been trying to get a home loan for many years and have been turned down year after year. We were so thrilled we got an automated approval and we felt she pulled off a miracle, I am hesitant to go somewhere else. Can I even go somewhere else?
Okay thats my nutshell, its a big one, but I keep reading on here that responders need/want more details, so here you go. Bring on the replys the suggestions..anything!

Your Realtor is certainly working this problem behind the scenes for you. Good luck to you.

altus2006

[Ultrarunner]

Originally Posted by altus2006

I was really shocked after finding out that it is impossible to get cash out financing for 6 months after purchasing with cash. This reg seems really dumb to me, especially with banks needing to get the repos off their books and then they do not offer any financing for their bow-wow properties.

Another "Stupid is as stupid does" scenario.

altus2006

When I was in the cycle of fixer to rental... it would take about 18 months to get a loan. The underwriters here were very strict of wanting to see 1 year of continuous rental income... they wanted seasoned income

Another problem is you can only have so many conventional loans open at one time... I think the limit is/was 4... irregardless of the the pay-off amounts.

I know it caused me to retire loans with small balances. Seller financed loans do not count towards the limit of 4.

[bornandraised atl]

they just increased the limit of props back to 10 from 4 on the conventional side...

It is tough to blame lenders now - 3 and 4 years ago there were financing options for everyone situation, and property --- we know how that turned out - the pendulum has swung back the other direction ... and rightfully so...