Two important rule changes affecting new Federal Housing Administration (FHA) insured borrowers will implemented this year

The first is an increase in the Up Front Mortgage Insurance Premium (UFMIP) which will be implemented on April 5th. The other change affects the seller contribution limit at closing.

On April 5, 2010, lenders must start collecting a higher 2.25% UFMIP. The .50% increase from 1.75% will help shore up the government agency's reserve fund which dropped to .53% in November. Congress mandates the agency maintain a minimum 2% ratio.

The fund covers losses on the mortgages the agency insures. Since the fall of 2008, the reserve fund has dropped steadily from a high of 3% to its low in November.

Some 14.36% of FHA loans were past due in the third quarter,according to the Mortgage Bankers Association. This compares to 9.64% of all loans.

FHA insured nearly a third of new mortgages in 2009.

Realtors with an FHA borrower may still have time to help save their clients additional cost at closing if an FHA case number can be assigned prior to Monday, April 5, 2010.

Time is of the essence. FHA personnel are preparing for a flood of last minute requests.

"Lenders should make every effort to order case numbers early in the week of March 29, 2010," stated Jerrold Mayer in an official agency memorandum from HUD's National Homeownership Center, "since it is possible that case numbers requested on Friday or Saturday may not be assigned prior to April 5, 2010, and therefore, be subject to the higher premium."

This UFMIP policy change will increase premiums for purchase money and refinance transactions, including FHA-to-FHA credit-qualifying and non-credit qualifying streamlined refinance transactions.

The second change expected in early summer 2010 affects the seller's contribution amount towards closing costs, points and prepaids. The new rate will be 3% of the home's sale price, half of the previous 6% rate.

That change, reports Tami Luhby, senior writer at CNNMoney.com, "will bring the agency in line with industry standards and remove the incentive to inflate appraisals."

Your Paramount Mortgage Banker offers more information about the new policy changes and help with FHA insured loans.

The First-Time and Repeat Home Buyer Tax Credit deadline is quickly approaching for homebuyers to have a valid signed contract by April 30, 2010. But for one group of taxpayers the deadline has been extended one full year to April 30, 2011.

Members of the armed forces, military intelligence officers and Foreign Service personnel who have been deployed overseas a minimum of 90 days in 2008 or 2009 get a break with an extended deadline.

Just about a month before president Obama signed the Worker, Homeownership, and Business Assistance Act (WHBA) of 2009 extending and expanding the tax credit on November 7, Congress passed a deadline extension for the military under the Service Members Home Ownership Tax Act of 2009.

The military had until November 30, 2010 to purchase their first homeunder the old guidelines. 

Once the WHBA Act was passed and signed into law, the Service Members' deadline was also extended and expanded.

An estimated 350,000 military personnel and an unknown number of federal employees are affected byt he extension.

Once their overseas duty cycle ends, this group of home buyers will enter back into the real estate market capable of taking full advantage of the tax credits available to them.

Consumers are paying more attention to their credit card payments and making sure they are current according to a newly released report from TransUnion. 

The credit information management company analyzed 27 million anonymous consumer records randomly sampled during the six quarters from 2008 to 2009. Their selection criteria included consumers with at leastone credit card and a current mortgage.

Consumers who are delinquent on their credit cards and current on their mortgages decreased to 3.6% from 4.1% in the time period of the study.

However, during the first quarter of 2008 a "flip" occurred where the percentage of consumers with current credit card balances and delinquent mortgages rose. This trend continued during the study time period logging an increase to 6.6% from 4.3%.

"Conventional wisdom has always been that, when faced with a financial crises, consumers will pay their secured obligations first,specifically mortgages," stated Sean Reardon, author of the study in the company's analytics and decisioning business unit.

This flip was more pronounced in the Florida and California markets and also for the lowest-scoring segment of the consumer market.

Analysts predicted that the flip would revert since the worst of the recession has passed, but that has not been the case, TransUnion says.