Senate Majority Leader Harry Reid has co-authored a proposal to extend the June 30 settlement deadline for the first time buyer credit until September 30 to give lenders more time to process the incredible volume of contracts trying to close. The surge in loan volume has created delays around home appraisals and the usual delays associated with short sales are also creating headaches for buyers hoping to take advantage of the credit. Of course, savvy buyers know that many short sales will NEVER close, so the extension may not help them at all. Read more about why short sales never close here.
The House also passed legislation this week granting the Federal Housing Administration (FHA) the authority to raise the annual fees it charges borrowers to help shore up the agency’s dwindling cash reserves. The fee is currently capped at 0.55 percent of the value of the loan. The bill raises the cap to 1.5 percent. FHA Commissioner David H. Stevens said it wants to raise the fee for new borrowers to 0.9% next year to help raise capital and also make the fees more consistent with private mortgage insurers. FHA has certainly been a good deal for buyers recently, with very competitive rates and low insurance charges, which resulted in FHA’s share of purchase loan market from 3% in 2006 to 30% recently. As the agency raises those fees, it plans to somewhat lower the upfront fees it charges borrowers.
Buyers: FHA is still a great option in 2010–low rates and fees, and only 3.5% down. If you’re interested in starting your Northern Virginia home search, contact us.