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Old 06-23-2010, 09:53 AM
 
704 posts, read 1,902,638 times
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from here I see that the orgination fee is 1% and the mortgage insurance is 1.5%. However, the copyright at the bottom is 2008.
FHA Typical closing cost for seller and buyers - Lendfast.com

on the list of fees I was given by my lender on my $40K FHA loan:
1. the origination fee is $488 or 1.22%
2. the mortgage insurance is $868.50 = 2.17%
Where is my lender getting these numbers?

and actually my loan will be less than 40K, once I pay 3.5% down = 38,600. They'll add the MI back in as part of the loan.


Have the FHA limits on these two fees gone up?
1.22% and 2.17% seem to be rather odd percentages (odd meaning not even, like 1.0, 1.25, 1.50, 2.00, 2.25, etc.)

Also, that article says the appraisal is usually 300-500. Mine, as expected is at the high end which is $495.00. Does FHA do the appraising? I think they do. What determines the cost of the appraisal?

With a $40,000 loan and closing cost over $5000, I'm trying to figure out why the cost are so high, I've got a long list of stuff.

Thanks.

Last edited by naeem5; 06-23-2010 at 10:01 AM..
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Old 06-23-2010, 12:06 PM
 
Location: Laguna Niguel, CA
768 posts, read 4,141,525 times
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Effective with the new GFE & HUD-1 statements that are required as of 1/1/10, there is no limit on origination fees. This is due to brokers having to credit borrowers with any rebate/yield spread premium they make from a wholesale lender, and then in order to get it back origination points have to be charged (in the end it's a wash, broker credits 2 points and then charges 2 points, etc.), so the 1% limit was lifted.

Mortgagee letter on that can be found at http://www.hud.gov/offices/adm/hudcl...es/09-53ml.pdf

There is monthly mortgage insurance (MMI) and upfront mortgage insurance premium (UFMIP).

Effective on FHA case #'s pulled on/after April 5th of 2010 the UFMIP increased to 2.25% for purchase & refinances, except for on reverse mortgages it's at 2%, and HOPE 4 Homeowners (for delinquent mortgages) it's 2%. This means on a $38,600 loan amount the UFMIP will be $868.50.

For loan terms greater than 15 years, and loan-to-values above 95%, the MMI is .55% of the base loan amount per year, paid on a monthly basis (so on a $100k base loan amount that's $550/year, or $45.73/mo). On your $38,500 loan amount it'd come out to $17.65/mo. 95% loan-to-value and below it's .5% (saves 1/20th of a percent).

For loan terms of 15 years or less, above 90% loan-to-value the MMI is .25% per year. 90% loan-to-value or below there is no MMI.

Mortgagee letter on that can be found at http://www.hud.gov/offices/adm/hudcl...es/10-02ml.pdf

FHA doesn't do the appraising, FHA approved appraisers do the appraising. Appraisal fees for FHA mortgages commonly come in the $400-500 range. This is due to FHA appraisals having to be ordered in compliance with the HVCC (Home Valuation Code of Conduct). The HVCC basically states that no one at the lender who is compensated based on a loan closing can partake in the appraiser selection process. This is because there were several bad apple loan officers & appraisers who were in collusion to appraise homes for a certain amount in order to make a financing transaction work. Most loan officers & appraisers didn't partake in such a practice, but a few bad apples spoil the bunch, so the HVCC was created. In order to be compliant many lenders have opted to make use of 3rd party appraisal management companies (AMC's) rather than hiring a separate individual to order the appraisals. AMC's don't work for free, so in addition to the appraisal fee they charge an additional appraisal management fee of $50-100. This fee is passed on to consumers in the form of the higher appraisal fee. Appraisers are reportedly being paid less than their normal fees as well, and I could gripe about the difficulties with the HVCC process but that is for another time and place.

The mortgagee letter that mostly addresses appraisals having to be within HVCC compliance can be found at http://www.hud.gov/offices/adm/hudcl...es/09-28ml.pdf
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Old 06-23-2010, 01:43 PM
 
704 posts, read 1,902,638 times
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ok, thanks for your helpful and detailed response.

"This is because there were several bad apple loan officers & appraisers who were in collusion to appraise homes for a certain amount in order to make a financing transaction work."
............I doubt it was such a collusion, but an FHA appraiser was sent out to look over a house I was interested in buying. There was no charge. However, there was a 6 foot gaping crack in the brick on the rear side of the house, wide enough to enter your little finger. The items noted as being needed were a carport roof support pole, one broken window glass, and flashing around the chimney. What about the brick crack? It would be called "cosmetic" and ignored. I could not count on the luck of the draw getting me that same appraiser so I walked. Not a single exterior or interior door would close normally in this house. There had been soil levelling in that entire area and some houses has extensive damage and others zero damage.
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Old 06-23-2010, 03:31 PM
 
Location: Laguna Niguel, CA
768 posts, read 4,141,525 times
Reputation: 456
Soil leveling/settling, ouch, definitely a huge red flag. Wise decision to not go forward with it.
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