Sunday, March 28, 2010
Friday, March 26, 2010
Thursday, March 25, 2010
Sunday, December 2, 2007
Wednesday, October 17, 2007
Government National Mortgage Association (Ginnie Mae)
Ginnie Mae I Mortgage-Backed Securities
Expands affordable housing in America by linking global capital markets to the nation’s housing market.
Nature of Program: Ginnie Mae guarantees investors (security holders) the timely payment of principal and interest on securities issued by private lenders that are backed by pools of Federal Housing Administration (FHA), Veterans Affairs (VA), Rural Housing Service (RHS), and Public and Indian Housing (PIH) mortgage loans. The full faith and credit guarantee of the U.S. Government that Ginnie Mae places on mortgage-backedsecurities lowers the cost of, and maintains the supply of, mortgage financing for government-backed loans.
In the Ginnie Mae I program, all mortgages in a pool are fixed-rate, single-family mortgages with the same interest rate. The mortgage interest rates must all be the same, and the same lender must issue the securities. With the exception of Ginnie Mae I pools that are used as collateral for state or local bond financing programs (BFP) for which Ginnie Mae provides special consideration, Ginnie Mae I securities have a servicing and guarantee fee that totals 50 basis points, and the minimum pool size is $1 million.
To issue a Ginnie Mae I security, an approved lender applies for a commitment fromGinnie Mae for the guaranty of securities. The lender originates or acquires mortgage loans and assembles them into a pool of mortgages. The Ginnie Mae I program permits lenders to issue securities backed by pools of single family, multifamily, and manufactured housing loans where the interest rate is the same for each loan in the pool. The lender decides to whom to sell the security and then submits the documents to Ginnie Mae’s pool processing agent. The agent prepares and delivers the Ginnie Mae guaranteed security to the investors designated by the lender. The lender is responsible for selling the securities and servicing the underlying mortgages. Issuers of Ginnie Mae I securities are also responsible for paying security holders on the 15th day of each month.
Applicant Eligibility:A firm must be approved as an issuer based on capital requirements, staffing, experience criteria, and infrastructure. The firm must also be an FHA-approved lender in good standing.
Legal Authority: Section 306(g) of the National Housing Act (12 U.S.C. 1721(g)).
Administering Office: Ginnie Mae, U.S. Department of Housing and Urban Development, Washington, DC 20410-9000.
Information Sources: Administering office; Office of Mortgage-Backed Securities.
On the Web: www.ginniemae.gov
Expands affordable housing in America by linking global capital markets to the nation’s housing market.
Nature of Program: Ginnie Mae guarantees investors (security holders) the timely payment of principal and interest on securities issued by private lenders that are backed by pools of Federal Housing Administration (FHA), Veterans Affairs (VA), Rural Housing Service (RHS), and Public and Indian Housing (PIH) mortgage loans. The full faith and credit guarantee of the U.S. Government that Ginnie Mae places on mortgage-backedsecurities lowers the cost of, and maintains the supply of, mortgage financing for government-backed loans.
In the Ginnie Mae I program, all mortgages in a pool are fixed-rate, single-family mortgages with the same interest rate. The mortgage interest rates must all be the same, and the same lender must issue the securities. With the exception of Ginnie Mae I pools that are used as collateral for state or local bond financing programs (BFP) for which Ginnie Mae provides special consideration, Ginnie Mae I securities have a servicing and guarantee fee that totals 50 basis points, and the minimum pool size is $1 million.
To issue a Ginnie Mae I security, an approved lender applies for a commitment fromGinnie Mae for the guaranty of securities. The lender originates or acquires mortgage loans and assembles them into a pool of mortgages. The Ginnie Mae I program permits lenders to issue securities backed by pools of single family, multifamily, and manufactured housing loans where the interest rate is the same for each loan in the pool. The lender decides to whom to sell the security and then submits the documents to Ginnie Mae’s pool processing agent. The agent prepares and delivers the Ginnie Mae guaranteed security to the investors designated by the lender. The lender is responsible for selling the securities and servicing the underlying mortgages. Issuers of Ginnie Mae I securities are also responsible for paying security holders on the 15th day of each month.
Applicant Eligibility:A firm must be approved as an issuer based on capital requirements, staffing, experience criteria, and infrastructure. The firm must also be an FHA-approved lender in good standing.
Legal Authority: Section 306(g) of the National Housing Act (12 U.S.C. 1721(g)).
Administering Office: Ginnie Mae, U.S. Department of Housing and Urban Development, Washington, DC 20410-9000.
Information Sources: Administering office; Office of Mortgage-Backed Securities.
On the Web: www.ginniemae.gov
Fair Housing and Equal Opportunity
Fair Housing Act
Investigates, conciliates, and charges cases of housing discrimination prohibited under the Fair Housing Act of 1968 (Title VIII).
Nature of Program: The Fair Housing Act prohibits discrimination in housing based on race, color, religion, sex, national origin, disability, or familial status (includes individuals or families with children under 18 years of age and pregnant women). The Fair Housing Act applies to almost all housing in the country.
The Fair Housing Act prohibits discrimination in residential real estate transactions and makes it illegal to coerce, intimidate, threaten, or interfere with people exercising their rights under the Act, or assisting others in exercising their rights.
To comply with the Fair Housing Act, a seller, landlord, lender, insurance agent, realtor, etc. may not:
• Deny housing, offer different terms and conditions to an applicant, or refuse to rent, sell, or negotiate with an applicant because of one or more of the prohibited bases cited above;
• Use discriminatory advertising or make discriminatory statements in connection with housing;
• Falsely deny that housing is available;
• Deny access to or membership in a multiple-listing service or real estate broker’s organization; or
• Discriminate in making loans for, or secured by, residential real estate.
In addition, landlords, condominium boards, homeowner associations, or other entities that exercise control over individual residences or common spaces within a development may not:
• Refuse permission for residents with disabilities or their families to make reasonable modifications to housing, at their own expense, if the changes are necessary for a resident to fully enjoy his or her premises. However, in someinstances, the resident may be required to restore the property to its original condition before moving out;
Refuse to make reasonable accommodations in rules, policies, practices, and services to provide equal opportunity to residents with disabilities to use and enjoy their homes, so long as it does not interfere with the rights of others to use and enjoy their homes.
Communities should not adopt and enforce discriminatory zoning and land use ordinances.
Familial status protections do not apply to certain housing for older people. Such housing is exempt under the law if it is intended for, and solely occupied by, residents 62 years of age or older, or if 80 percent of the units are occupied by at least one person 55 years of age or older, and the housing facility or community publishes and adheres to policies and procedures that demonstrate this intent to be housing for older persons.
Since March 13, 1991, most multifamily dwellings of four or more units have been required to be designed and built so that the units are accessible to people with disabilities.
In addition to nondiscrimination, the Fair Housing Act also provides that HUD mustadminister all of its programs and activities in a manner that affirmatively furthers the policies of the Act.
Anyone who believes that he or she has been discriminated against can file a complaint with any HUD office in person, by mail, or by telephone within one year after the alleged discrimination has occurred. HUD or an equivalent state or local agency will investigate and attempt to conciliate the complaint. If it is not conciliated and it appears that discrimination has occurred, then HUD will issue a charge. A HUD administrative law judge (ALJ) will hold a hearing unless either party chooses to take a case to federal district court.
If proceeding before a HUD ALJ, the complainant may receive access to the housing that was denied and may be awarded compensatory damages and attorneys’ fees as well. In such cases, the discriminating party may also be assessed a civil penalty of up to $11,000 for a first offense. If a federal district court hears the case, the complainant may be awarded punitive damages, but civil penalties are not available.
When HUD finds that a complaint has merit and requires prompt court action, as when an eviction is threatened or when a unit is about to be sold or rented to another person, HUD may direct the Department of Justice to file an action holding the unit off the market until the matter is resolved.
Applicant Eligibility:Any individual experiencing housing discrimination may file a complaint with any HUD office, in person, by mail, or by telephone, not later than one year after the alleged discriminatory act has occurred or terminated. An aggrieved person may also file suit in a federal court whether or not a complaint has been filed with HUD.
HUD has established a national toll-free housing discrimination hotline at: (800) 669-9777 (voice) or (800)-927-9275 (TTY).
Investigates, conciliates, and charges cases of housing discrimination prohibited under the Fair Housing Act of 1968 (Title VIII).
Nature of Program: The Fair Housing Act prohibits discrimination in housing based on race, color, religion, sex, national origin, disability, or familial status (includes individuals or families with children under 18 years of age and pregnant women). The Fair Housing Act applies to almost all housing in the country.
The Fair Housing Act prohibits discrimination in residential real estate transactions and makes it illegal to coerce, intimidate, threaten, or interfere with people exercising their rights under the Act, or assisting others in exercising their rights.
To comply with the Fair Housing Act, a seller, landlord, lender, insurance agent, realtor, etc. may not:
• Deny housing, offer different terms and conditions to an applicant, or refuse to rent, sell, or negotiate with an applicant because of one or more of the prohibited bases cited above;
• Use discriminatory advertising or make discriminatory statements in connection with housing;
• Falsely deny that housing is available;
• Deny access to or membership in a multiple-listing service or real estate broker’s organization; or
• Discriminate in making loans for, or secured by, residential real estate.
In addition, landlords, condominium boards, homeowner associations, or other entities that exercise control over individual residences or common spaces within a development may not:
• Refuse permission for residents with disabilities or their families to make reasonable modifications to housing, at their own expense, if the changes are necessary for a resident to fully enjoy his or her premises. However, in someinstances, the resident may be required to restore the property to its original condition before moving out;
Refuse to make reasonable accommodations in rules, policies, practices, and services to provide equal opportunity to residents with disabilities to use and enjoy their homes, so long as it does not interfere with the rights of others to use and enjoy their homes.
Communities should not adopt and enforce discriminatory zoning and land use ordinances.
Familial status protections do not apply to certain housing for older people. Such housing is exempt under the law if it is intended for, and solely occupied by, residents 62 years of age or older, or if 80 percent of the units are occupied by at least one person 55 years of age or older, and the housing facility or community publishes and adheres to policies and procedures that demonstrate this intent to be housing for older persons.
Since March 13, 1991, most multifamily dwellings of four or more units have been required to be designed and built so that the units are accessible to people with disabilities.
In addition to nondiscrimination, the Fair Housing Act also provides that HUD mustadminister all of its programs and activities in a manner that affirmatively furthers the policies of the Act.
Anyone who believes that he or she has been discriminated against can file a complaint with any HUD office in person, by mail, or by telephone within one year after the alleged discrimination has occurred. HUD or an equivalent state or local agency will investigate and attempt to conciliate the complaint. If it is not conciliated and it appears that discrimination has occurred, then HUD will issue a charge. A HUD administrative law judge (ALJ) will hold a hearing unless either party chooses to take a case to federal district court.
If proceeding before a HUD ALJ, the complainant may receive access to the housing that was denied and may be awarded compensatory damages and attorneys’ fees as well. In such cases, the discriminating party may also be assessed a civil penalty of up to $11,000 for a first offense. If a federal district court hears the case, the complainant may be awarded punitive damages, but civil penalties are not available.
When HUD finds that a complaint has merit and requires prompt court action, as when an eviction is threatened or when a unit is about to be sold or rented to another person, HUD may direct the Department of Justice to file an action holding the unit off the market until the matter is resolved.
Applicant Eligibility:Any individual experiencing housing discrimination may file a complaint with any HUD office, in person, by mail, or by telephone, not later than one year after the alleged discriminatory act has occurred or terminated. An aggrieved person may also file suit in a federal court whether or not a complaint has been filed with HUD.
HUD has established a national toll-free housing discrimination hotline at: (800) 669-9777 (voice) or (800)-927-9275 (TTY).
PROTECTING CONSUMERS FROM FRAUD IN THE SALE OR LEASING OF LAND
Protects consumers from fraud and abuse in the sale or lease of land.
HUD is responsible for administering the laws governing land sales registration. The Interstate Land Sales Full Disclosure Act prohibits developers and their agents from selling or leasing, by mail or by means of interstate commerce, any lot in any subdivision of 100 or more nonexempt lots unless two conditions are met:
(1) A Statement of Record must be filed with HUD that discloses and documents current information about the ownership of the land; the state of title; physical characteristics; planned availability of roads, services and utilities; and other matters.
(2) A printed Property Report, the disclosure instrument provided for by the Act that describes the items mentioned in (1) above, must be delivered to each purchaser or lessee in advance of signing the contract or agreement.
The antifraud provisions of the Act apply to subdivisions containing 25 or more lots. The Act also contains antifraud provisions that prohibit developers from engaging in misleading sales practices. Any willful violation of the Act is subject to criminal penalties of imprisonment for not more than 5 years or a fine of not more than $10,000, or both. A suit for damages may be brought by a purchaser in any state or federal court for the district in which the defendant may be found or in which the transaction took place. HUD may seek an injunction against any developer that it can show is violating or about to violate the law and may obtain restitution for aggrieved purchasers. HUD may also impose civil money penalties for violations and suspend the registration of a developer whose Statement of Record or Property Report includes an untrue statement of material fact oromits material facts.
Applicant Eligibility:Interstate Land Sales is a regulatory program; the Act applies to all developers and agents who sell or lease or offer to sell or lease lots in subdivisions using the mail or means of interstate commerce, unless the offering is exempt.
Legal Authority: Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq.). Regulations are at 24 CFR parts 1710-1720 and 3800.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Source: Administering office.
On the Web: www.hud.gov/offices/hsg/sfh/ils/ilshome.cfm
Current Status: Active.
HUD is responsible for administering the laws governing land sales registration. The Interstate Land Sales Full Disclosure Act prohibits developers and their agents from selling or leasing, by mail or by means of interstate commerce, any lot in any subdivision of 100 or more nonexempt lots unless two conditions are met:
(1) A Statement of Record must be filed with HUD that discloses and documents current information about the ownership of the land; the state of title; physical characteristics; planned availability of roads, services and utilities; and other matters.
(2) A printed Property Report, the disclosure instrument provided for by the Act that describes the items mentioned in (1) above, must be delivered to each purchaser or lessee in advance of signing the contract or agreement.
The antifraud provisions of the Act apply to subdivisions containing 25 or more lots. The Act also contains antifraud provisions that prohibit developers from engaging in misleading sales practices. Any willful violation of the Act is subject to criminal penalties of imprisonment for not more than 5 years or a fine of not more than $10,000, or both. A suit for damages may be brought by a purchaser in any state or federal court for the district in which the defendant may be found or in which the transaction took place. HUD may seek an injunction against any developer that it can show is violating or about to violate the law and may obtain restitution for aggrieved purchasers. HUD may also impose civil money penalties for violations and suspend the registration of a developer whose Statement of Record or Property Report includes an untrue statement of material fact oromits material facts.
Applicant Eligibility:Interstate Land Sales is a regulatory program; the Act applies to all developers and agents who sell or lease or offer to sell or lease lots in subdivisions using the mail or means of interstate commerce, unless the offering is exempt.
Legal Authority: Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq.). Regulations are at 24 CFR parts 1710-1720 and 3800.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Source: Administering office.
On the Web: www.hud.gov/offices/hsg/sfh/ils/ilshome.cfm
Current Status: Active.
Real Estate Settlement Procedures Act (RESPA)
RESPA seeks to reduce unnecessarily high settlement costs by requiring disclosures to homebuyers and sellers, and by prohibiting abusive practices in the real estate settlement process.
RESPA requires that lenders give all borrowers of federally related purchase mortgage loans a HUD-prepared booklet with information about real estate transactions, settlement services, and relevant consumer protection laws. When applying for a loan, a borrower must receive a good faith estimate of the settlement costs likely to be incurred. One day before settlement, the borrower may request that the person conducting the settlement provide information on the actual settlement costs. At settlement, both the borrower and the seller, if there is one, are entitled to a settlement statement that itemizes the costs they paid in connection with the transaction.
RESPA prohibits certain abusive practices. Kickbacks, referral fees, and unearned fees are outlawed, sellers may not require borrowers to purchase title insurance from specific companies, and excessively large escrow accounts cannot be required by the loan servicer.
RESPA requires disclosure of the possibility of mortgage servicing being transferred. The statute also provides certain borrower rights if the loan servicer makes errors in paying escrow account expenditures. Finally, RESPA mandates that the servicer provide initial and annual escrow account statements to each borrower.
Applicant Eligibility:RESPA is a regulatory program. It covers virtually all single family loan transactions.
Legal Authority: Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 etseq.). Regulations are at 24 CFR parts 3500 and 3800.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Source: Administering office.
On the Web: www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
Current Status: Active.
RESPA requires that lenders give all borrowers of federally related purchase mortgage loans a HUD-prepared booklet with information about real estate transactions, settlement services, and relevant consumer protection laws. When applying for a loan, a borrower must receive a good faith estimate of the settlement costs likely to be incurred. One day before settlement, the borrower may request that the person conducting the settlement provide information on the actual settlement costs. At settlement, both the borrower and the seller, if there is one, are entitled to a settlement statement that itemizes the costs they paid in connection with the transaction.
RESPA prohibits certain abusive practices. Kickbacks, referral fees, and unearned fees are outlawed, sellers may not require borrowers to purchase title insurance from specific companies, and excessively large escrow accounts cannot be required by the loan servicer.
RESPA requires disclosure of the possibility of mortgage servicing being transferred. The statute also provides certain borrower rights if the loan servicer makes errors in paying escrow account expenditures. Finally, RESPA mandates that the servicer provide initial and annual escrow account statements to each borrower.
Applicant Eligibility:RESPA is a regulatory program. It covers virtually all single family loan transactions.
Legal Authority: Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 etseq.). Regulations are at 24 CFR parts 3500 and 3800.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Source: Administering office.
On the Web: www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
Current Status: Active.
Good Neighbor Next Door
Provides law enforcement officers, teachers, firefighters, and emergency medical technicians with the opportunity to purchase homes located in revitalization areas at significant discount.
The Department wants to make American communities stronger and build a safer nation. The Good Neighbor Next Door program promotes these goals by encouraging persons whose daily professional responsibilities represent a nexus to the needs of the community to purchase and live in homes in these communities. This program makes homes in revitalization areas available to law enforcement officers, teachers, firefighters, and emergency medical technicians. Each year, HUD sells a limited number of properties from its inventory at a 50 percent discount from the list price to eligible persons in the above professions. To make these homes even more affordable, eligible program participants may apply for an FHA-insured mortgage with a downpayment of only $100. Because homes sold through this program are located inrevitalization areas, there may be additional assistance from state or local government sources. If the home needs repairs, the purchaser may also use FHA’s Section 203(k) mortgage program. The Section 203(k) program provides financing for both the purchase of the home and cost of needed repairs.
Applicant Eligibility:Purchasers must be employed as a full-time law enforcement officer, teacher, firefighter, or emergency medical technician, and must certify that they intend to continue such employment for at least one year following the date of closing. The eligible purchaser does not need to be a first-time homebuyer. However, the purchaser (or spouse) cannot have owned another home for one year prior to the time a bid for purchase is submitted, and the purchaser must agree to live in the HUD home as the principal residence for 3 years after move-in.
Legal Authority: Section 204(g) of the National Housing Act (12 U.S.C. 1710(g)). Regulations are at 24 CFR part 291, subpart F.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office andHUD Homeownership Centers (Atlanta, Philadelphia, Denver, Santa Ana).
On the Web: www.hud.gov/offices/hsg/sfh/reo/reohome.cfm
Current Status: Active.
The Department wants to make American communities stronger and build a safer nation. The Good Neighbor Next Door program promotes these goals by encouraging persons whose daily professional responsibilities represent a nexus to the needs of the community to purchase and live in homes in these communities. This program makes homes in revitalization areas available to law enforcement officers, teachers, firefighters, and emergency medical technicians. Each year, HUD sells a limited number of properties from its inventory at a 50 percent discount from the list price to eligible persons in the above professions. To make these homes even more affordable, eligible program participants may apply for an FHA-insured mortgage with a downpayment of only $100. Because homes sold through this program are located inrevitalization areas, there may be additional assistance from state or local government sources. If the home needs repairs, the purchaser may also use FHA’s Section 203(k) mortgage program. The Section 203(k) program provides financing for both the purchase of the home and cost of needed repairs.
Applicant Eligibility:Purchasers must be employed as a full-time law enforcement officer, teacher, firefighter, or emergency medical technician, and must certify that they intend to continue such employment for at least one year following the date of closing. The eligible purchaser does not need to be a first-time homebuyer. However, the purchaser (or spouse) cannot have owned another home for one year prior to the time a bid for purchase is submitted, and the purchaser must agree to live in the HUD home as the principal residence for 3 years after move-in.
Legal Authority: Section 204(g) of the National Housing Act (12 U.S.C. 1710(g)). Regulations are at 24 CFR part 291, subpart F.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office andHUD Homeownership Centers (Atlanta, Philadelphia, Denver, Santa Ana).
On the Web: www.hud.gov/offices/hsg/sfh/reo/reohome.cfm
Current Status: Active.
FEDERAL Adjustable Rate Mortgages (ARMs)
Federal mortgage insurance for adjustable rate mortgages (ARMs).
Under this HUD-insured mortgage, the interest rate and monthly payment may change during the life of the loan. The initial interest rate, discount points, and the margin are negotiated by the buyer and lender.
The one-year Treasury Constant Maturities Index is used for determining the interest rate changes. FHA lenders may offer ARMs that have interest rates that are fixed for the first one, 3, 5, 7, or 10 years of the mortgage. The interest rate for one-year and 3-year insured ARMs may not be increased or decreased by more than one percentage point per year after the fixed-payment period is over, with a maximum change of 5 percentage points over the life of the loan. For 5-year, 7-year, and 10-year ARMs, the interest rate may change a maximum of 2 percentage points annually and 6 percentage points over the life of the loan.
Lenders are required to disclose to borrowers the nature of the ARM loan at the time ofloan application. In addition, borrowers must be informed at least 25 days in advance of any adjustment to the monthly payment.
Applicant Eligibility:All FHA-approved lenders may make adjustable rate mortgages; creditworthy applicants who will be owner-occupants may qualify for such loans.
Legal Authority: Section 251 of the National Housing Act (12 U.S.C. 1715z-16). Regulations are at 24 CFR 203.49.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/251--df.cfm
Current Status: Active.
Under this HUD-insured mortgage, the interest rate and monthly payment may change during the life of the loan. The initial interest rate, discount points, and the margin are negotiated by the buyer and lender.
The one-year Treasury Constant Maturities Index is used for determining the interest rate changes. FHA lenders may offer ARMs that have interest rates that are fixed for the first one, 3, 5, 7, or 10 years of the mortgage. The interest rate for one-year and 3-year insured ARMs may not be increased or decreased by more than one percentage point per year after the fixed-payment period is over, with a maximum change of 5 percentage points over the life of the loan. For 5-year, 7-year, and 10-year ARMs, the interest rate may change a maximum of 2 percentage points annually and 6 percentage points over the life of the loan.
Lenders are required to disclose to borrowers the nature of the ARM loan at the time ofloan application. In addition, borrowers must be informed at least 25 days in advance of any adjustment to the monthly payment.
Applicant Eligibility:All FHA-approved lenders may make adjustable rate mortgages; creditworthy applicants who will be owner-occupants may qualify for such loans.
Legal Authority: Section 251 of the National Housing Act (12 U.S.C. 1715z-16). Regulations are at 24 CFR 203.49.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/251--df.cfm
Current Status: Active.
FHA Graduated Payment Mortgage (GPM)
Enables a household with a limited income that is expected to rise to buy a home sooner by making mortgage payments that start small and increase gradually over time.
Both programs target early homeownership by helping first-timehomebuyers and others with limited incomes, particularly young families who expect their income to rise, but may not yet be able to handle all of the upfront and monthly costs involved in buying and owning a home.
The Graduated Payment Mortgage (GPM) works in times of high interest rates when first-time homebuyers cannot meet the standard mortgage payment, but expect their incomes to increase substantially in the next 5 to 10 years. The GPM accrues negative amortization so that the borrower’s initial mortgage payments are made at a nominally discounted interest rate from the standard prevailing rate. The difference is then added to the principal balance. The GPM program offers five different plans varying in length of time and rate of increase of nominal interest rate. It is anticipated that when the interest rate, and thus the mortgage payment, increases with time the borrower’s income also will have increased to accommodate the higher payments. Larger than usual downpayments are required to prevent the total amount of the loan from exceeding the statutory loan-to-value ratios.Downpayments required for GPMs vary in proportion to interest rates on the loans. In all other ways, the GPM is subject to the rules governing ordinary HUD-insured home loans.
Applicant Eligibility:All FHA-approved lenders may make GPMs available to persons who intend to use the mortgage property as their primary residence and who expect to see their income rise appreciably in the future.
Legal Authority: Section 245(a) of the National Housing Act (12 U.S.C. 1715z-10(a)). Regulations are at 24 CFR 203.45.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/245a--df.cfm
Current Status: Active.
Both programs target early homeownership by helping first-timehomebuyers and others with limited incomes, particularly young families who expect their income to rise, but may not yet be able to handle all of the upfront and monthly costs involved in buying and owning a home.
The Graduated Payment Mortgage (GPM) works in times of high interest rates when first-time homebuyers cannot meet the standard mortgage payment, but expect their incomes to increase substantially in the next 5 to 10 years. The GPM accrues negative amortization so that the borrower’s initial mortgage payments are made at a nominally discounted interest rate from the standard prevailing rate. The difference is then added to the principal balance. The GPM program offers five different plans varying in length of time and rate of increase of nominal interest rate. It is anticipated that when the interest rate, and thus the mortgage payment, increases with time the borrower’s income also will have increased to accommodate the higher payments. Larger than usual downpayments are required to prevent the total amount of the loan from exceeding the statutory loan-to-value ratios.Downpayments required for GPMs vary in proportion to interest rates on the loans. In all other ways, the GPM is subject to the rules governing ordinary HUD-insured home loans.
Applicant Eligibility:All FHA-approved lenders may make GPMs available to persons who intend to use the mortgage property as their primary residence and who expect to see their income rise appreciably in the future.
Legal Authority: Section 245(a) of the National Housing Act (12 U.S.C. 1715z-10(a)). Regulations are at 24 CFR 203.45.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/245a--df.cfm
Current Status: Active.
FHA Mortgage Insurance for Older, Declining Areas
Mortgage insurance to purchase or rehabilitate housing in older, declining urban areas.
In consideration of the need for adequate housing for low- and moderate-income families, HUD insures lenders against loss on mortgage loans to finance the purchase, rehabilitation, or construction of housing in older, declining, but still viable urban areas where conditions are such that normal requirements for mortgage insurance cannot be met. Properties must be in a reasonably viable neighborhood and acceptable risk under the mortgage insurance regulations. The terms of the loans vary according to the HUD/FHA program under which the mortgages are insured. HUD determines if the loan should be insured pursuant to Section 223(e) and become an obligation of the Special Risk Insurance Fund. This allows HUD to more effectively manage the greater expected risk in these loans. The insurance premium is 0.5 percent per year on the outstanding loan balance.
Applicant Eligibility:Home or project owners ineligible for FHA mortgage insurance because property is located in an older, declining urban area.
Legal Authority: Section 223(e) of the National Housing Act (12 U.S.C. 1715n(e)). Regulations are at 24 CFR 203.43a.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office andHUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/223e--df.cfm
Current Status: Active.
In consideration of the need for adequate housing for low- and moderate-income families, HUD insures lenders against loss on mortgage loans to finance the purchase, rehabilitation, or construction of housing in older, declining, but still viable urban areas where conditions are such that normal requirements for mortgage insurance cannot be met. Properties must be in a reasonably viable neighborhood and acceptable risk under the mortgage insurance regulations. The terms of the loans vary according to the HUD/FHA program under which the mortgages are insured. HUD determines if the loan should be insured pursuant to Section 223(e) and become an obligation of the Special Risk Insurance Fund. This allows HUD to more effectively manage the greater expected risk in these loans. The insurance premium is 0.5 percent per year on the outstanding loan balance.
Applicant Eligibility:Home or project owners ineligible for FHA mortgage insurance because property is located in an older, declining urban area.
Legal Authority: Section 223(e) of the National Housing Act (12 U.S.C. 1715n(e)). Regulations are at 24 CFR 203.43a.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office andHUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/223e--df.cfm
Current Status: Active.
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