FEDERAL HOUSING FINANCE AGENCY

FEDERAL HOUSING FINANCE AGENCY

NEWS RELEASE
For Immediate Release
Contact: Corinne Russell (202) 414-6921
February 23, 2009 Stefanie Mullin (202) 414-6376

2009 CONFORMING LOAN LIMITS INCREASED BY
AMERICAN RECOVERY AND REINVESTMENT ACT

WASHINGTON, DC – The American Recovery and Reinvestment Act (ARRA), which was signed into law on Tuesday, increased the maximum conforming loan limit for
mortgages originated in 2009. The increase affects 250 counties across the United States. For these areas, identified in the attached table, Fannie Mae and Freddie Mac loan limits
will return to their late-2008 levels, which were up to $729,750 for one-unit properties in the continental United States. Loan limits in other areas are not changed by the
legislation.

Conforming loan limits for 2009 were originally announced in late 2008 and had been calculated under terms set forth in the Housing and Economic Recovery Act of 2008
(HERA), passed in July. The new ARRA legislation stipulates that, for loans originated in 2009, the loan limit is to be the higher of the 2008 limits and those originally calculated
for 2009 under HERA. Where the 2008 and 2009 limits differ, the 2008 limits tend to be higher and thus, in most cases, loan limits are reverting back to last year’s levels. For the
relatively few counties where 2009 limits actually increased (43 counties in Virginia, North Carolina, and California), the new limits will remain at the higher level.

Notable elements of the new legislation:
1. The Director of FHFA is given the authority to increase loan limits levels for “subareas” under provisions in ARRA. Given the implementation difficulties associated
with establishing multiple limits for any given county, FHFA’s Director currently has no plans to use this discretion.

2. The loan limits established under ARRA apply to all loans originated in 2009. For loans purchased in 2009 that were originated from July 1, 2007 through December
31, 2008, the same limits will apply. For loans purchased in 2009, but originated before July 1, 2007, the limits previously announced by FHFA on November 7 ,
2008 and updated in December will apply. For example, a $700,000 mortgage originated in 2006 would not be eligible for purchase this year, even if the
applicable local limit under ARRA is $729,750.

Several lookup tables are available at http://www.ofheo.gov/Regulations.aspx?Nav=128 that provide detailed information about local area loan limits. A full county listing is provided
showing loan limits for every U.S. county and county-equivalent. Also provided is a table showing those metropolitan areas where the new 2009 loan limits exceed the baseline
$417,000 level for one-unit properties.

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phase-out Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phase-out means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase-out to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Higher Loan Amounts
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

1. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

1. Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

2. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount

Tax Credit for Homebuyers

Economic Stimulus Plan Benefits the Housing and Mortgage Industries
Revised February 17, 2009
Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today…

The following discussions are intended for you to use directly with your client either in writing or verbally.

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Homestyle Loans- Rehab for Investment Homes

Please see the update below. There are some great programs for loan right now. I’d like to point out the Conventional – NOT FHA- Homestyle Loans. These loans are REHAB loans for Primary residences, Second Homes AND Investment properties! Call me for more information at 760-837-1488!! Talk soon! Homestyle Loan,

· FHA’s minimum down payment is being increased from 3% to 3.5% as of Jan 1, 2009. The only way to honor the 3% down payment option for your client, is to get their loan approved before the end of the year. So, if you don’t already have an approved offer and a loan submitted, then you should be notifying your clients about the change.

· FHA’s new Loan Limit for Riverside County is $355,350, not $500,000. This is also in effect on January 1, 2009, and under the same scenario as above.

· Conventional Loan limits have also been reduced back to $417,000, not $500,000 anymore. Any loan amount above 417K, is going to be considered a jumbo mortgage.

· Reverse Mortgages are going to be a great mortgage tool moving forward to help seniors over the age of 62 purchase a new home, with no income or credit qualification required. Yes, you heard that here first.

· Rates are great today, why not help you and your past clients out by sending them to us to do a cash out refinance on their primary residence at 5%, so they can get the down payment needed to buy a investment property from you today.

· USDA & VA Loan’s – both offer your clients 100% financing as long as they qualify for the program.

· 203(k) FHA remodel home loan – This program will allow your clients to include in the loan the cost of improvements the home will need to make it complete. This program requires only 3.5% down, and works on owner occupied properties only. Max loan $355,350.

· Fannie/Freddie’s Homestyle Loans – this program works very similar to the above program, which allows you to include the cost of the home improvements in the loan, except that it works for all occupancy types. Primary, Second Homes, and Inv. Properties. Loan amount goes to $417,000, and down payments vary based on occupancy.

Rates going to 4.5%?

There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. Rates are not going to 4.5% with the wave of a wand by Hank Paulson or Ben Bernanke. As a matter of fact, the massive borrowing to fund the TARP program has a negative effect on rates. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Remember, it may make sense for you to act now, and take advantage of current historically low rates…with the possibility of refinancing should rates decline further. Waiting for rates to fall to 4.5% may leave people sorely disappointed.

Mortgage bonds are trading low

Hope you had a safe and fun Halloween! Check out this week’s newsletter. I’d like you to focus on the bond graph below. Mortgage bonds are trading low right now, which means rates are higher than we want, I would recommend to float interest rates for the next few days. I’m thinking about 10 days into middle of next week. If you have deals in progress or offers just accepted advise your clients to hold off on locking until the bond market comes back after the elections next week. There’s lots of volatility right now; however, I will keep you up to date with the latest mortgage news!

Happy Halloween Week!

Happy Halloween Week!

Franklin Loan Center has the competitive platform you need to navigate this lending environment. We are a mortgage bank which means we can approve your deals in-house with our own underwriters who want deals approved, closing quickly, drawing loan docs with my team members, and funding NOW!! We are NOT the average broker who doesn’t have control of underwriting or funding. Use us to stay competitive.

Take control of your deals and refer them to Franklin Loan Center today!

I’m NEVER too busy for any of your referrals. This week’s rate sheet is attached.

Be prepared to set your clocks back 1-hour this Saturday night as Daylight savings will kick in until the Spring!

STILL IN BUSINESS!

I am still cranking out loans and what a great week! Franklin Loan Center is continuing to expand their underwriting, processing, and funding departments to make your fundings quicker and make you look good! Use us and experience the difference! We are continuing to expand our platform to remain competitive for loan programs. Cal-HFA, USDA, FHA, VA, Reverse Mortgages and Hard Money, as well. Call me for all of your funding needs!!

GO TO http://www.DESERTFHA.com TO RSVP FOR MY FHA EVENT ON TUESDAY MORNING 8:30 TO 10:00AM AT CDAR. (See the attached flyer)

Market Update

Mortgage Bonds are attempting to build on the gains seen over the past two days, after being helped by some weak news in the Housing sector.

The lower-than-expected New Homes Sales for September were reported at their lowest level since January 1991. Additionally, building permits came in at a 27-year low. This weaker-than-expected news gave Mortgage Bonds a bit of a boost today.

Stocks continued their volatile ride yesterday as the Dow climbed a staggering 400 points after being down 400 on the day. This wild volatility demonstrates the need to work with a mortgage professional who is knowledgeable about the market in these crazy times. For now, I recommend floating to see if Bonds can continue to build on their momentum. I will be monitoring the situation carefully, and I will let you know if anything changes.

More inflation news will follow

“THOSE WHO CAN SOAR TO THE HIGHEST HEIGHTS CAN ALSO PLUNGE TO THE DEEPEST DEPTHS.” Lucy Maud Montgomery. Despite all of the government’s efforts, markets here and around the world plunged this week as the financial crisis continues to grow.

On Tuesday, the Fed and Treasury Department announced plans to purchase short-term commercial paper that many companies rely on to finance their day-to-day operations, to help businesses with their short-term credit and funding needs. The government hoped this announcement would help ease uncertainty, restore confidence, and give Stocks a boost. They hoped for a similar result on Wednesday when the Federal Reserve cut the Fed Funds Rate by 50 basis points, and coordinated an emergency global interest rate cut with the European Central Bank, Canada, the UK, Switzerland and Sweden. The Central Banks in Asia followed suit and cut their benchmark interest rates overnight as well.

However, on Thursday, Stocks plummeted nearly 700 points to a five-year low, and on Friday Stocks ended the day another 126 points lower (after plunging 500 points three times throughout the day). Bonds and home loan rates also worsened sharply in the second part of the week, as Bonds dropped below several important floors of support, and home loan rates ended the week .50% higher than where they began.

From a historical perspective, we are in the midst of a brutal bear market that began on October 9th 2007. Remember that a decline of 20% constitutes a bear market…and a 10% decline is a “correction.” The last bear market occurred between March 24th of 2000 and October 9th 2002 saw a 49% drop. Overall, the average bear market lasts for 12.3 months, with the average decline being 32%. The current bear market is right in line with the average historical time frames, and the extent of the decline is worse than previous bear market averages, but still slightly better than the bottom made in 2002. So the historical data might suggest that we could be nearing a bottom. I will continue to monitor this situation closely, and let you know how this will impact home loan rates in the weeks and months ahead. One bright spot is that oil prices are also plunging, falling from a high of $147 per barrel last July to around $80 per barrel Friday morning…which at least makes a tr ip to fill up at the gas station slightly less painful.

PLUNGING PORTFOLIOS ARE SOMETHING WE NEVER WANT TO SEE HAPPEN, AND NEITHER ARE PLUNGING SAVINGS ACCOUNTS. CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME GREAT TIPS ON STAYING WITHIN YOUR BUDGET!

Forecast for the Week

Last week was a volatile one despite the lack of scheduled economic reports, and this week several big pending reports could add to the volatility…even with the markets being closed on Monday in observance of Columbus Day. Wednesday will bring the wholesale inflation measuring Producer Price Index and the Retail Sales report for September. The Retail Sales report is a measure of the total receipts of retail stores, and changes in these numbers are closely followed as a timely indicator of broad consumer spending patterns. It will be especially important to see what kind of impact the financial crisis has had on recent spending trends.

More inflation news will follow on Thursday, as September’s Consumer Price Index (CPI) report, which gives a read on inflation at the consumer level, will be released. CPI tells us how much more expensive goods and services are this month over last month, and this widely watched inflation indicator will definitely make headlines. And given what’s been happening in the markets, it will be important to note what’s happening in the housing sector, which Friday’s Housing Starts and Building Permits Report for September will reveal.

Remember when Bond prices move higher, home loan rates move lower…and vice versa. As you can see in the chart below, Bonds and home loan rates worsened this week, due to a variety of factors. I will be watching closely to see if Bonds and home loan rates can change direction.

What is the expected impact of HOPE for Homeowners (H4H)?

What is the expected impact of HOPE for Homeowners (H4H)? Per HUD.gov

The Congressional Budget Office estimates that as many as 400,000 homeowners could avoid foreclosure through this program over the next three years.

What is the value of the HOPE for Homeowners program to lenders?

Only FHA approved mortgagees can originate H4H loans. H4H loans may benefit lenders by helping them avoid foreclosure expenses. Although the lender will likely have to write down their existing loan in order to originate an H4H loan, it is still less expensive than foreclosure and disposition of property.

Why should existing lien holders accept the short payoff that is required under the terms of the law?

HUD understands that it will be a challenge to encourage lien holders to accept short payoffs in order to participate in this program, especially when there are other loss mitigation tools available that may provide a more suitable solution. However, in instances where those tools are ineffective, we believe that the holders of these mortgages should accept the short payoffs in lieu of the tremendous losses associated with foreclosure. Similar challenges exist with subordinate lien holders but by offering them the opportunity to have an interest in FHA’s share of future appreciation in the property, we hope to entice these lien holders to participate as well.

What advice should loan servicers/lenders give borrowers who are facing difficulties fulfilling their obligations on their existing mortgage(s)?

The H4H program is another loss mitigation option to keep borrowers in their homes on sustainable and affordable terms. Lenders should provide information to borrowers on possible options include contacting a HUD approved counseling agency. Borrowers may call 1-800-569-4287 or visit http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

When can I start originating H4H loans?

The program is effective from October 1, 2008 to September 30, 2011.

Eligibility and Underwriting issues

How does the H4H program differ from FHA Secure?

Under H4H:

• Any type of first mortgage as long as it was originated on or before January 1, 2008.

• All existing lien holders must waive prepayment penalties and late charges, as well as extinguish all liens against the property.

• Existing first lien holders are required to accept the proceeds of the H4H mortgage as payment in full.

• Borrowers will be required to share both the initial equity created with the H4H loan, and future appreciation.

• The maximum loan amount is $550,440, nationwide.

How does the appreciation sharing piece work?

To entice subordinate lien holders to participate in the negotiation process and release their liens, FHA has the authority to share its future appreciation entitlement with them. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share.

Are there special underwriting requirements for the H4H program?

Yes, in addition to standard underwriting procedures, the underwriter must:

• Determine that the borrowers existing total monthly mortgage payment is in excess of 31% of their gross monthly income in March of 2008.

• Determine the borrower’s total monthly mortgage payment on the new H4H loan is less than the borrower’s total monthly mortgage payment on existing loans.

• Determine that the DTI’s are at or below 31/43. However, if the borrower has successfully completed a 3 month trial modification, ratios can be expanded not to exceed 38/50.

• Review income as reported on the transcript or copy of the borrower’s income tax returns for the previous two years.

How is the total monthly mortgage payment on the existing loan(s) calculated for the purpose of qualifying the borrower for the H4H program?

The total monthly mortgage payment is defined as the fully indexed, fully-amortizing Principal, Interest, Taxes and Insurance (PITI) payment. This includes homeowner’s association dues, grounds rents, special assessments, and all subordinate liens as of March 1, 2008.

Can I add a non-occupying co-borrower to help qualify?

No, however you may add a non-occupying ,co-signer who does not have any ownership interest in the property.

What if there is currently a non-occupying co-borrower on the loan?

The non-occupying co-borrower will need to quit claim their interest in the property prior to the occupying co-borrowers applying for the H4H program.

What loans are eligible for refinance under the H4H program?

Any type of mortgage is eligible for refinancing under the H4H program, including conventional (prime, Alt-A, subprime), or government backed (FHA, VA, or Rural Development), fixed or adjustable rate mortgage.

The loan must have originated on or before January 1, 2008, the borrower must have made at least six (6) payments on the existing mortgage, and the total monthly mortgage payment exceeds 31% or the borrower’s March 2008 gross monthly income. The borrower may be current or delinquent at the time the new H4H mortgage is originated.

What properties are eligible?

The property to be refinanced must be the borrower’s primary and only residence in which the borrower has an ownership interest.

Only 1-unit properties are eligible, including condominiums, cooperative units and manufactured housing permanently affixed to realty.

Does the borrower have to be delinquent on their existing loans to be eligible for the H4H program?

No, the borrower may be current or delinquent at the time of application for the H4h mortgage.

What must the existing lienholders do?

Existing first mortgage lien holders must waive any and all prepayment penalties and late payment fees, agree to accept the proceeds from the H4H mortgage as payment in full, and release their outstanding mortgage liens.

Existing subordinate lien holders must waive all prepayment penalties and late payment fees as well as release their outstanding mortgage liens.

Will I have to get a new appraisal or can I use an AVM?

In all cases a new FHA appraisal must be ordered specifically for the H4H transaction and the appraisal should be no more than 3 months old at the time of closing.

What are the rates for the Upfront Mortgage and Annual Insurance Premiums (UFMIP)?

The Upfront Mortgage Insurance Premium (UFMIP) is 3% and the Annual is 1.5%

Can the UFMIP be financed?

Yes, however the maximum LTV under the H4H program is 90% regardless of whether or not the UFMIP is financed.

Will there be additional disclosure requirements?

Yes, the originating lender must provide the HOPE for Homeowners Consumer Disclosure and Certification form at the time of initial application for the Program.

Are there additional lender certifications?

Due to the statutory requirements and the unique nature of the program, lenders and underwriters will execute a certification assuring HUD that they have underwritten and closed the loan in accordance with the H4H program guidelines.

What is the maximum LTV for the H4H program?

The maximum LTV for the Program is 90%, including any financed UFMIP.

Who can pay closing costs?

Standard FHA policy regarding closing costs is applicable, including the 1% cap on origination fees.

• Borrowers may pay closing costs from their own assets,

• They may be financed into the mortgage provided the 90% LTV limit is not exceeded,

• The servicing lender, originating lender and/or a third party (e.g. a Federal, state or local Program) and/or

• The originating lender my pay the borrower’s closing costs and prepaid items through premium pricing.

Is subordinate financing allowed to pay closing costs, like under FHASecure?

No. Subordinate financing is not allowed in the first 5 years of the mortgage except in when necessary to ensure maintenance of property standards.

Will Wall Street be receptive to purchasing these new loans?

These loans can be securitized in Ginnie Mae FS Pools, making them attractive to Wall Street and other investors.