[SDEngineer]

Mello-Roos taxes are set at the time of the first sale and won’t change until they expire (i.e., if the assessed tax at 450K was an extra 2250/yr, even if someone later buys it at 250K, it’s still going to be 2250/yr).

As I understand it though, the base RE tax (1.1%ish) is reassessed at the sale price when the property changes hands. There might be an exception for REO properties, but I hadn’t heard of it before now.

[SDEngineer]

Actually, the HUD was immediately sued over this rule, and the rule was stayed the same day as it was made, pending litigation from the downpayment assistance programs.

The stay was originally temporary, but as of 3/5/08, the judge made it permanent, ruling that the HUD was unlikely to prevail in their arguments. All downpayment assistance programs that meet IRS guidelines for operating as chartered still are available.

see here for the ruling:

http://www.ameridream.org/Documents/HUDRule/HUD-Rule-Vacated-Court-Order-Opinion-3-5-08.pdf

Whether or not the downpayment assistance programs are a good idea (they’re not, if you can’t save 3% of the home’s value that you’re buying – and relatively quickly at that, you probably have no business buying that home), they are still legal, and that is unlikely to change anytime soon.

On the original posters question though, the seller won’t GIVE you that 3%, it’ll be tacked onto the house (if they were willing to give it to you, you could just as easily have bargained it down that 3% + the $500 or so fee the downpayment service charges, which is paid by the seller). In addition, as you noted, you’d be on the hook for the 1.5% up front MIP that the FHA charges for their loans, as well as the 0.5%/year mortgage insurance that they require. With 20% down, you avoid both those charges under a standard mortgage, along with the lower monthly payment. Unless you’re planning on walking on the mortgage, in the longer run, it’s probably better to do the 20% down.

[SDEngineer]

Actually, the HUD was immediately sued over this rule, and the rule was stayed the same day as it was made, pending litigation from the downpayment assistance programs.

The stay was originally temporary, but as of 3/5/08, the judge made it permanent, ruling that the HUD was unlikely to prevail in their arguments. All downpayment assistance programs that meet IRS guidelines for operating as chartered still are available.

see here for the ruling:

http://www.ameridream.org/Documents/HUDRule/HUD-Rule-Vacated-Court-Order-Opinion-3-5-08.pdf

Whether or not the downpayment assistance programs are a good idea (they’re not, if you can’t save 3% of the home’s value that you’re buying – and relatively quickly at that, you probably have no business buying that home), they are still legal, and that is unlikely to change anytime soon.

On the original posters question though, the seller won’t GIVE you that 3%, it’ll be tacked onto the house (if they were willing to give it to you, you could just as easily have bargained it down that 3% + the $500 or so fee the downpayment service charges, which is paid by the seller). In addition, as you noted, you’d be on the hook for the 1.5% up front MIP that the FHA charges for their loans, as well as the 0.5%/year mortgage insurance that they require. With 20% down, you avoid both those charges under a standard mortgage, along with the lower monthly payment. Unless you’re planning on walking on the mortgage, in the longer run, it’s probably better to do the 20% down.

[SDEngineer]

Actually, the HUD was immediately sued over this rule, and the rule was stayed the same day as it was made, pending litigation from the downpayment assistance programs.

The stay was originally temporary, but as of 3/5/08, the judge made it permanent, ruling that the HUD was unlikely to prevail in their arguments. All downpayment assistance programs that meet IRS guidelines for operating as chartered still are available.

see here for the ruling:

http://www.ameridream.org/Documents/HUDRule/HUD-Rule-Vacated-Court-Order-Opinion-3-5-08.pdf

Whether or not the downpayment assistance programs are a good idea (they’re not, if you can’t save 3% of the home’s value that you’re buying – and relatively quickly at that, you probably have no business buying that home), they are still legal, and that is unlikely to change anytime soon.

On the original posters question though, the seller won’t GIVE you that 3%, it’ll be tacked onto the house (if they were willing to give it to you, you could just as easily have bargained it down that 3% + the $500 or so fee the downpayment service charges, which is paid by the seller). In addition, as you noted, you’d be on the hook for the 1.5% up front MIP that the FHA charges for their loans, as well as the 0.5%/year mortgage insurance that they require. With 20% down, you avoid both those charges under a standard mortgage, along with the lower monthly payment. Unless you’re planning on walking on the mortgage, in the longer run, it’s probably better to do the 20% down.

[SDEngineer]

Actually, the HUD was immediately sued over this rule, and the rule was stayed the same day as it was made, pending litigation from the downpayment assistance programs.

The stay was originally temporary, but as of 3/5/08, the judge made it permanent, ruling that the HUD was unlikely to prevail in their arguments. All downpayment assistance programs that meet IRS guidelines for operating as chartered still are available.

see here for the ruling:

http://www.ameridream.org/Documents/HUDRule/HUD-Rule-Vacated-Court-Order-Opinion-3-5-08.pdf

Whether or not the downpayment assistance programs are a good idea (they’re not, if you can’t save 3% of the home’s value that you’re buying – and relatively quickly at that, you probably have no business buying that home), they are still legal, and that is unlikely to change anytime soon.

On the original posters question though, the seller won’t GIVE you that 3%, it’ll be tacked onto the house (if they were willing to give it to you, you could just as easily have bargained it down that 3% + the $500 or so fee the downpayment service charges, which is paid by the seller). In addition, as you noted, you’d be on the hook for the 1.5% up front MIP that the FHA charges for their loans, as well as the 0.5%/year mortgage insurance that they require. With 20% down, you avoid both those charges under a standard mortgage, along with the lower monthly payment. Unless you’re planning on walking on the mortgage, in the longer run, it’s probably better to do the 20% down.

[SDEngineer]

Actually, the HUD was immediately sued over this rule, and the rule was stayed the same day as it was made, pending litigation from the downpayment assistance programs.

The stay was originally temporary, but as of 3/5/08, the judge made it permanent, ruling that the HUD was unlikely to prevail in their arguments. All downpayment assistance programs that meet IRS guidelines for operating as chartered still are available.

see here for the ruling:

http://www.ameridream.org/Documents/HUDRule/HUD-Rule-Vacated-Court-Order-Opinion-3-5-08.pdf

Whether or not the downpayment assistance programs are a good idea (they’re not, if you can’t save 3% of the home’s value that you’re buying – and relatively quickly at that, you probably have no business buying that home), they are still legal, and that is unlikely to change anytime soon.

On the original posters question though, the seller won’t GIVE you that 3%, it’ll be tacked onto the house (if they were willing to give it to you, you could just as easily have bargained it down that 3% + the $500 or so fee the downpayment service charges, which is paid by the seller). In addition, as you noted, you’d be on the hook for the 1.5% up front MIP that the FHA charges for their loans, as well as the 0.5%/year mortgage insurance that they require. With 20% down, you avoid both those charges under a standard mortgage, along with the lower monthly payment. Unless you’re planning on walking on the mortgage, in the longer run, it’s probably better to do the 20% down.

[SDEngineer]

Well, the FHA does require full-doc of income and reasonable debt ratios (I believe they’re at 29/41 right now), so it’s hard to compare them to the liar loans that most were using to buy beyond their means. While there’s no set income limit to use a FHA loan, to get the $697500 loan, the buyers would have to be able to document around 230K a year in earnings, without excessive debt on top of that.

I think the value increase was a bad idea on the FHA’s part (since their intended purpose was to help first-time buyers, hence the low down requirements), mostly because, even in San Diego, at least now (though maybe not in 2005/2006) you can get a starter house for their max previous (about 363K). I doubt many people would consider a 700K house a “starter” house.

[SDEngineer]

Well, the FHA does require full-doc of income and reasonable debt ratios (I believe they’re at 29/41 right now), so it’s hard to compare them to the liar loans that most were using to buy beyond their means. While there’s no set income limit to use a FHA loan, to get the $697500 loan, the buyers would have to be able to document around 230K a year in earnings, without excessive debt on top of that.

I think the value increase was a bad idea on the FHA’s part (since their intended purpose was to help first-time buyers, hence the low down requirements), mostly because, even in San Diego, at least now (though maybe not in 2005/2006) you can get a starter house for their max previous (about 363K). I doubt many people would consider a 700K house a “starter” house.

[SDEngineer]

Well, the FHA does require full-doc of income and reasonable debt ratios (I believe they’re at 29/41 right now), so it’s hard to compare them to the liar loans that most were using to buy beyond their means. While there’s no set income limit to use a FHA loan, to get the $697500 loan, the buyers would have to be able to document around 230K a year in earnings, without excessive debt on top of that.

I think the value increase was a bad idea on the FHA’s part (since their intended purpose was to help first-time buyers, hence the low down requirements), mostly because, even in San Diego, at least now (though maybe not in 2005/2006) you can get a starter house for their max previous (about 363K). I doubt many people would consider a 700K house a “starter” house.

[SDEngineer]

Well, the FHA does require full-doc of income and reasonable debt ratios (I believe they’re at 29/41 right now), so it’s hard to compare them to the liar loans that most were using to buy beyond their means. While there’s no set income limit to use a FHA loan, to get the $697500 loan, the buyers would have to be able to document around 230K a year in earnings, without excessive debt on top of that.

I think the value increase was a bad idea on the FHA’s part (since their intended purpose was to help first-time buyers, hence the low down requirements), mostly because, even in San Diego, at least now (though maybe not in 2005/2006) you can get a starter house for their max previous (about 363K). I doubt many people would consider a 700K house a “starter” house.

[SDEngineer]

Well, the FHA does require full-doc of income and reasonable debt ratios (I believe they’re at 29/41 right now), so it’s hard to compare them to the liar loans that most were using to buy beyond their means. While there’s no set income limit to use a FHA loan, to get the $697500 loan, the buyers would have to be able to document around 230K a year in earnings, without excessive debt on top of that.

I think the value increase was a bad idea on the FHA’s part (since their intended purpose was to help first-time buyers, hence the low down requirements), mostly because, even in San Diego, at least now (though maybe not in 2005/2006) you can get a starter house for their max previous (about 363K). I doubt many people would consider a 700K house a “starter” house.

[SDEngineer]

While I’m sure a homeowner could in fact manage to trash their house without leaving any real evidence as to who did it, I can think of any number of ways that MOST homeowners who trash their houses could be caught.

Did they snag everything even remotely portable to sell on Craigslist/E-bay? Trace that sale/auction posting back. Something tells me that sink came from somewhere.

Do they have neighbors? Neighbors can be excellent witnesses – especially since I suspect that anyone who WOULD trash a home they no longer own may not exactly be the best neighbor – it suggests they have anger issues.

In any case, the banks aren’t pursuing them – most likely because their legal departments are already swamped doing all the actual foreclosure work. It’s simply time and money they’d rather spend on other issues at this point.

[SDEngineer]

While I’m sure a homeowner could in fact manage to trash their house without leaving any real evidence as to who did it, I can think of any number of ways that MOST homeowners who trash their houses could be caught.

Did they snag everything even remotely portable to sell on Craigslist/E-bay? Trace that sale/auction posting back. Something tells me that sink came from somewhere.

Do they have neighbors? Neighbors can be excellent witnesses – especially since I suspect that anyone who WOULD trash a home they no longer own may not exactly be the best neighbor – it suggests they have anger issues.

In any case, the banks aren’t pursuing them – most likely because their legal departments are already swamped doing all the actual foreclosure work. It’s simply time and money they’d rather spend on other issues at this point.

[SDEngineer]

While I’m sure a homeowner could in fact manage to trash their house without leaving any real evidence as to who did it, I can think of any number of ways that MOST homeowners who trash their houses could be caught.

Did they snag everything even remotely portable to sell on Craigslist/E-bay? Trace that sale/auction posting back. Something tells me that sink came from somewhere.

Do they have neighbors? Neighbors can be excellent witnesses – especially since I suspect that anyone who WOULD trash a home they no longer own may not exactly be the best neighbor – it suggests they have anger issues.

In any case, the banks aren’t pursuing them – most likely because their legal departments are already swamped doing all the actual foreclosure work. It’s simply time and money they’d rather spend on other issues at this point.

[SDEngineer]

While I’m sure a homeowner could in fact manage to trash their house without leaving any real evidence as to who did it, I can think of any number of ways that MOST homeowners who trash their houses could be caught.

Did they snag everything even remotely portable to sell on Craigslist/E-bay? Trace that sale/auction posting back. Something tells me that sink came from somewhere.

Do they have neighbors? Neighbors can be excellent witnesses – especially since I suspect that anyone who WOULD trash a home they no longer own may not exactly be the best neighbor – it suggests they have anger issues.

In any case, the banks aren’t pursuing them – most likely because their legal departments are already swamped doing all the actual foreclosure work. It’s simply time and money they’d rather spend on other issues at this point.

[Author]

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