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New Mortgagee Letter

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William K

Thread Starter
Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
Just heard from a client about the new Mortgagee Letter
http://www.HUD.gov/offices/adm/hudclips/letters/mortgagee/files/08-23ml.pdf

Requires minimum down payment to be based upon APPRAISED VALUE not the SALES PRICE.

If property appraises for more than sales price buyer will have a minimum down payment based upon APPRAISED VALUE!

I guess this is an attempt to squash inflating values ( built in equity)
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
LTV:​
For purchase money mortgages, the LTV is 96.5 percent, i.e., the reciprocal of the
3.5 percent downpayment requirement. The examples that follow will use 96.5 percent and

apply it to the lesser of the appraiser’s estimate of value or the adjusted sales price.
 

cdeyoung20

Junior Member
Joined
Aug 10, 2008
Professional Status
Certified Residential Appraiser
State
Louisiana
I believe the first line in that new mortgagee clause that states that the down payment will be 3.5% of the appraised value is a typo. If you continue reading, it goes on to give an example:

•​
Calculation of the maximum mortgage: The maximum mortgage is calculated by
applying 96.5 percent to the
lesser of either a) the appraiser’s estimate of value or b) the
contract price for the property minus any required adjustments.
Example 1
Sales Price: $218,000 Appraiser’s Estimate of Value: $220,000
Maximum Mortgage: $218,000 x 96.5% =
$210,370

Downpayment: $218,000 – 210,370 = $7630
 

cdeyoung20

Junior Member
Joined
Aug 10, 2008
Professional Status
Certified Residential Appraiser
State
Louisiana
The biggest change that I see, is that the down payment assistance will no longer allow the buyer to purchase the home without a down payement. They will have to pay 3.5% of the balance of the purchase agreeement after the sellers down payment assistance has been deducted.
 

TXCBoy36

Junior Member
Joined
Oct 3, 2007
Professional Status
Certified Residential Appraiser
State
Colorado
The biggest change that I see, is that the down payment assistance will no longer allow the buyer to purchase the home without a down payement. They will have to pay 3.5% of the balance of the purchase agreeement after the sellers down payment assistance has been deducted.

My understanding is that there is no more down payment assistance programs anymore at all.....is that accurate??

I thought Neamiah Fund is dead and not usable?

:new_snipersmilie:
 

AnonApprsr

Elite Member
Joined
Jan 21, 2008
Professional Status
Certified Residential Appraiser
State
Massachusetts
TXC, do you consider an FHA loan down payment assistance?
 

cdeyoung20

Junior Member
Joined
Aug 10, 2008
Professional Status
Certified Residential Appraiser
State
Louisiana
My understanding is that there is no more down payment assistance programs anymore at all.....is that accurate??

I thought Neamiah Fund is dead and not usable?

:new_snipersmilie:


I don't know about all of the down payment assistance programs, but this is what the new mortgagee letter states:

"
Example 2
Sales Price: $218,000 Appraiser’s Estimate of Value: $220,000
Gift Card worth $3000 Adjustment to Sales Price: $218,000 - $3000
Maximum Mortgage: $215,000 x 96.5% =​
$207,475

Downpayment Calculation: $218,000 - $207,475 =​
$10,525

The calculation of the maximum mortgage requires that the gift card value, which
was provided by the builder at closing, be subtracted from the sales price and, thus,
the 96.5 percent applied to $215,000 rather than $218,000. The downpayment, of
course, is calculated by subtracting the mortgage amount from the actual contract​
sales price.
 

cdeyoung20

Junior Member
Joined
Aug 10, 2008
Professional Status
Certified Residential Appraiser
State
Louisiana
I doubt there will be any more down payment assistance from sellers anylonger. The only reason anyone used them to begin with was to get 100% financing.
 

Couch Potato

Elite Member
Joined
Mar 15, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
The house of representatives has a bill to reinstate the legalized mortgage fraud known as down payment assistance and the votes to pass it right now. Only the senate or president can stop it from being enabled again.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I doubt there will be any more down payment assistance from sellers anylonger. The only reason anyone used them to begin with was to get 100% financing.

I wouldn't bet against ("downpayment assistance") it.

There will be political pressure to jump-start the housing market.
 
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