FHA Allowable Closing Costs In 2006 FHA discontued itemized allowable and non-allowable fees
FHA Allowable Closing Costs
NEW!
FHA amended their long standing 1 point origination Fee limit to whatever is usual and customary in each market.

Forward Mortgage Allowable FHA Closing Costs
  • 30 year Fixed and ARMs                                                           In 2006 FHA discontinued itemized allowable and non-allowable closing costs Lenders can now collect from the borrower those customary and reasonable FHA closing costs necessary to close the mortgage. However, borrowers may not pay a tax service fee.
         (Reference  FHA Mortgagee Letter 2006-04

  • 203(k) Rehabilitation FHA Allowable Closing Costs                           Lenders can collect from the borrower those customary and reasonable closing costs necessary to close the mortgage. However, borrowers may not pay a tax service fee and may not pay more than a one percent loan origination fee.
  • Borrower may also pay the supplemental origination fee the portion of the mortgage proceeds allocated to the rehabilitation.  (cost of rehabilitation)
        (Reference  FHA Mortgagee Letter 2006-04

Reverse Mortgage FHA Allowable Closing Costs
The amount of the origination fee that can be charged to the HECM borrower can be negotiated between the lender and borrower, however, the amount of the origination fee that can be financed in the HECM loan is capped at the greater of $2,000 or two-percent of the maximum claim amount. The financed origination fee includes the costs for underwriting, processing, and any mortgage broker or loan correspondent fees. The HECM lender is not permitted to charge a HECM borrower any fees in addition to the origination fee to pay a mortgage broker or loan correspondent fee.
(Reference FHA Mortgagee Letter 2006-07)

FHA's Tiered Pricing Rules
FHA's Tiered Pricing Rules prohibit a lender from charging higher prices (discount points) for low balance loans than the lender charges for higher balance loans. A lender's customary lending practices may not provide for a variation of more than two discount points charged on its FHA mortgages within a geographic area. In addition, any variation within two points must be based on actual variations in fees or costs to the lender to make the loan. Mortgagee Letter 1994-16 provides guidance to lenders with respect to tiered pricing rules. Additional guidance regarding pricing with respect to overages and yield spread premiums can be found in Mortgagee Letters 1994-43 and 2001-26.

        








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